Tuesday, September 4, 2007

Cracking Down on Pyramids

A recent article in the English language state media says that pyramid selling is becoming rampant in the country despite a number of crackdowns.

The government is also considering revising laws to impose heavier penalties on those engaged in this kind of multi-level network business.

"Pyramid selling, outlawed in the country about 10 years ago, is still serious. And it's growing," says Gao Feng, deputy director of the ministry's economic crime investigation bureau.

"We call them economic cults," Gao continued. "They can turn a normal person into an idiot."

A few days later in the subway I saw many billboard ads like this one from Amway. I think it says that if you buy the beauty night creams on the left, you can get a choice of one of the evening handbags on the right.

Amyway is all over the place here. Tonight I came home and got a flyer in my mailbox advertising Amyway Visa cards with the Bank of China.

So I'm wondering if the government knows that Amyway does multi-level selling...


Amway and Quixtar - an opportunity for anyone said...

There's a difference between an illegal pyramid and multi-level marketing. It gets confused because some countries use different terminology, and "pyramid selling" refers to legal MLM. Personally I think it's a dumb term since virtually *all* product distribution systems are essentially pyramid-shaped. Manufacturer sells in large lots to a number of wholesalers who sell in smaller lots to even more retailers who sell in even more smaller lots to even more customers. Draw it out - classic pyramid shape.
I'm no expert of chinese law, but in other countries the main difference between an illegal pyramid and legal MLM is that in an illegal pyramid it's all about recruiting, and you get paid for recruiting more people. In Amway, even in countries where recruiting is effectively unrestricted, there is no payment made for recruiting. Recruit 100000 people, you don't make a cent. It's about selling products to end users, and that's where the money comes from.

IheartNY said...
This comment has been removed by the author.
IheartNY said...

I googled the amway guy above and discovered that he trolls blogs to promote amway/quixtar because he works for amway/quixtar.

IheartNY said...

correction - he's somewhere in the MLM foodchain