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1 Rationale Multi-level business is the direct form of distribution of goods and services to consumers through the network of distributors Multi-level business has developed in many countries in the world with a lot of participants and benefits for enterprises, distributors and customers In the multi-level model, goods are distributed through the network of participants at different levels Goods and services are directly marketed and distributed to consumers; and the participants (also known as distributors) can earn commissions, bonuses and other benefits from their activities If consumers have good perceptions on the product quality after using, they can share their experience with others and become distributors Therefore, goods are distributed by a new method, a new channel When goods and services are sold directly to consumers through a network of participants, enterprises and manufacturers can save a lot of costs for advertising, transportation, warehousing, promotion, etc With the reduced costs, businesses will invest further in production for higher quality and competitive products Many studies have been done on the multi-level business in the world and in Vietnam However, there has not been any research with direct and systematic approach to the multi-level business model under the perspective of economic management in the current context of Viet Nam as a socialist-oriented market economy in the development process under the strong impact of globalization as well as Industry 4.0 Multi-level business was introduced to Viet Nam in the late 20 th century and early 21st century However, it has widely developed since 2004 There have been a lot of regulated documents on managing this business model as well as an official management framework from the central to local levels with the coordination of Ministry of Industry and Trade (through Viet Nam Competition Authority) and provincial People's Committees (through Departments of Industry and Trade) Since the official introduction and development of multi-level business in Viet Nam, there exist various negative forms with a lot of drawbacks apart from its economic and social benefits The objective of State administration is to create a fair, competitive business environment for the economic and trade development However, multi-level businesses have taken advantage of the favourable conditions, the limited capabilities of management agencies and the ineffective management tools to perform illegal or unauthorized activities Besides, based on the characteristics of multi-level model, some companies have negatively exploited the trust of honest people who simply want to earn money but lack information and knowledge on market and trade In response to these shortcomings, on 12 March, 2018, the Government promulgated Decree 40/2018/ND-CP on management of multi-level business effective from May, 2018 with adaptations to the rapid development of multi-level business model in Viet Nam The modern multi-level model has made significant contribution to the economy of such countries as the US, Canada, Russia, etc However, it is of great importance to clearly understand why it has caused so many negatives consequences in application in Viet Nam Therefore, it is high time for studies to build theoretical background on multi-level business, State administration for multi-level business in the current context On that basis, it is necessary to study and evaluate the State administration situation of multi-level business in Vietnam with the achievements and limitations, as well as the shortcomings, thereby establishing a practical basis for solutions, and recommendations to better manage multi-level business in Viet Nam For the above reasons, the author decided to conduct a doctoral thesis with the topic: "State administration for multi-level business in Viet Nam” Aims and tasks of the research - Aims: Systematizing and developing the theoretical and practical backgrounds for recommendations on perfecting the State administration for multi-level business - Tasks: In line with the research aims, the research tasks include: First: Systematizing theories on multi-level business, State administration for multi-level business Studying international lessons to build theoretical and practical background for recommendations to complete the State administration for multi-level business Second: Analyzing the situation of management of multi-level business in Viet Nam, evaluating the achievements and limitation as well as the causes and problems in the State administration for multilevel business Third: Based on the theoretical background and practices, presenting views, approaches and recommendations on perfecting State administration for multi-level business towards the targets of economic development and international integration of Viet Nam Communist Party and the State Subject and scope of the research - Subject: theories and practices of State administration for multi-level business - Scope: + Content: The thesis presents the fundamental theories on State administration for multi-level business, lessons from countries where the model started and nations with the equivalent economic development as Viet Nam The thesis then assesses the situation of State administration for multi-level business in Viet Nam from regulating documents issuance, management organization, inspection, supervision to violation handling in multi-level business management + Space: The thesis is conducted on multi-level business within Viet Nam and at some localities in Viet Nam + Time: The thesis is conducted from 2006 to present with the orientations and solutions to 2025 and following years 3 Theoretical and practical contributions for the research - The thesis clarifies theories on multi-level business, State administration for multi-level business, features, roles, objectives and principles of State administration for multi-level business, three methods of State administration, two major tools of the State to manage multi-level business as well as criteria to evaluate the State administration for multi-level business - The author studies the practices of countries where the model started and developed and some regional nations to draw lessons on perfecting State administration for multi-level business in Viet Nam - The researcher collects both primary and secondary data to comprehend multi-level business, State administration for multi-level business, problems facing the State administration for multi-level business in Viet Nam The thesis synthesizes secondary data and analyzes primary data through survey and interviews on three management methods, tools and evaluation criteria to present the achievements, limitations as well as causes and problems in the State administration for multi-level business - On the basis of the theories and practices of State administration for multi-level business, the current situation of the economy, the views and directions of the State, the researcher makes recommendations on perfecting the State administration for multi-level business in terms of structure; personnel and personnel planning in administration; regulating documents; communication and information; inspection, supervision and violation handling Design of the research Besides introduction, conclusion, references, the thesis consists of four chapters: Chapter 1: Contexts of the study and research methodology Chapter 2: Theoretical background and international lessons on State administration for multi-level business Chapter 3: Situation of State administration for multi-level business in Viet Nam Chapter 4: Solutions on perfecting State administration for multi-level business in Viet Nam CHAPTER 1: CONTEXTS OF THE STUDY AND RESEARCH METHODOLOGY 1.1 1.1.1 Contexts of the study Studies on multi-level business The notable studies on the issue include: Richard Poe (2013), with the renowned work Wave – Network Marketing in the 21st Century; P.Sreekumar (Institute of Chartered Financial Analysts of India, International Conference on Marketing and Social Sciences, October, 2007); Robert Fitzpatrick, a top expert on the pyramid model, with the practical insights into multi-level business or pyramid business model; Viet Nam Competition Authority under Ministry of Industry and Trade in “Frequently Asked Questions on Multi-level Business” (2011); Hanoi Department of Industry and Trade in “Regulations on Multi-level Business” (2018); Bui Trung Thuong with the article Management for Multi-level Business in Viet Nam: Situation and Solutions, Trade Review, 2011, Vol.17, p.14-17; John Kalench with The Greatest Opportunity in the History of the World (Cơ hội thuận lợi lịch sử loài người) (2002), World Publishing House, Hanoi; Le Hoang Vu with the study Cases of Illicit Multi-level Business in Viet Nam (2010), University of Foreign Trade; Le Anh Tuan with the article Amending Laws on Illicit Multi-level Business, Journal of Legislative Studies, National Assembly Office, Vol.9/2006, p.44-50 1.1.2 Studies on State administration for trading activities Dao Minh Hong and Le Hong Hiep in Reference Handbook of International Relations (2013), Faculty of International Relations – Hochiminh City University of Social Sciences and Humanities; Adam Smith (1776), The Wealth of Nations; John Maynard Keynes (1936), The General Theory of Employment, Interest and Money; Milton Friedman (1962), Capitalism and Freedom; P.A Samuelson (1948), Economics; J.K Galbraith (1908-2006), an economist at Harvard University – USA; Tran Van Thang (2004), State Administration for Trade in the Current Context in Viet Nam, Doctoral Thesis, Viet Nam Institute of Economics; Vu Tuan Anh (1994), Roles of the State in Economic Development, Social Sciences Publisher, Hanoi 1.1.3 Studies on multi-level business in Viet Nam Hoang Dao Thu Thuy (2012), Laws Regulating Multi-level Business in Viet Nam – Theories and Practices, Hanoi Law University; Le Anh Tuan (2006), Amending Laws on Illicit Multi-level Business, Journal of Legislative Studies, National Assembly Office, Vol.9/2006, p.44-50; Doan Trung Kien (2008), Legal Effect of Multi-level Business Contracts, Jurisprudence Journal, Hanoi Law University, p.51-57; Doan Van Binh, Doan Trung Kine (2007), Regulations on Multi-level Business in Viet Nam: Issues to Address, Jurisprudence Journal, Hanoi Law University, Vol.7, p.3-7; Le Bi Bo (2016), State Administration for Multi-level Business in Viet Nam, Doctoral Thesis, Vietnam Academy of Social Sciences, Graduate Academy of Social Sciences, with the major in Constitutional Law and Administrative Law 1.1.4 Conclusions and the gaps of research 1.1.4.1 Conclusions from previous studies a, Theories From the macro approach, the studies already Built a theoretical framework for State administration, State administration for trading activities; Generalized the history and development of multi-level business in the world In particular, the previous studies have presented approaches from the viewpoints of multi-level enterprises; difficulties in multi-level business and factors affecting State administration for multi-level business b, Practices The studies described the State administration for multi-level business in Viet Nam at the time of research They have given general solutions without focusing on any groups of management solutions They also denoted the situation of multi-level business in Viet Nam at the time of research However, they have not thoroughly analyzed the causes of illicit multi-level business models as well as difficulties in State management in the current context However, during the study, the author took reference from the above mentioned studies and useful information Among those, the author referred to the Doctoral thesis on Constitution and Administrative Law by Le Bi Bo on some theoretical issues on State administration for multi-level business and solutions to perfecting State administration for multi-level business in Viet Nam Nevertheless, this thesis took a different approach from the perspective of Economic Management; multi-level business is studied in activities, agents, and impacts; and the thesis presented the aims of State administration for multi-level business as well as criteria to evaluate State administration for multi-level business 1.1.4.2 Research gaps First: The research gap in the current model of multi-level business in Viet Nam The thesis will analyze the legal model of multi-level business in Viet Nam as well as its negative variations Second: The research gap in the current State administration for multi-level business in Viet Nam The thesis clarifies the management functions of the State for multi-level business including directing; creating environment and promoting business in addition to inspecting and controlling Management solutions should associate with management methods, namely issuing exclusive regulations, supplementing management personnel and strengthening inspection and violation settlement in multilevel business and flexible application of methods and instruments for multi-level business administration 1.2 Related theories and research methodology 1.2.1 Related theories The thesis is oriented to study under the socio-economic views, plans and policies of the Party and the State in each period The author studied, analyzed and recommended solutions based on some classic and modern economic theories including trade liberalization, trade protectionism, management by objectives and stakeholders From these, the author interpreted and presented the necessity of State administration for multi-level business 6 1.2.2 Research procedure In order to fulfill the research aims, the thesis was conducted under the following procedure: Finding secondary data on theories and foreign practices on State administration for multi-level business Building theoreticalViews, orientations, solutions and recommendations framework Analyzing and evaluating the current situation Interviewing experts on businesses multi-level business and State administration Collecting secondary dataSurveying on the current by questionnaires situation on multi-level (Source: Author’s illustration) Chart 1.1 Research procedure 1.2.3 Research methodology 1.2.3.1 Methodology: The thesis uses the method of dialectical materialism, historical materialism, with a systematic and logical approach to understand and analyze the research subjects In Chapter 2, the author uses historical materialism method, a systematic approach, with dialectical inferences In Chapter 3, the researcher uses methods of analysis, synthesis, comparison, statistics, description by graphs, tables, and charts In Chapter 4, the author uses the method of synthesizing documents, dialectical methods, and logic 1.2.3.2 Research methods: Secondary data collection; Primary data collection (Survey questionnaires, Expert in-depth interviews); Secondary data analysis; Primary data analysis CHAPTER 2: THEORETICAL BACKGROUND AND INTERNATIONAL LESSONS ON STATE ADMINISTRATION FOR MULTI-LEVEL BUSINESS 2.1 2.1.1 2.1.1.1 Multi-level business Definition Definition of selling In classical economics, selling is the activity of exchanging goods or services from the sellers to the buyers in return for money or items or value as agreed Selling is also associated with consuming goods According to Pham Cong Doan and Nguyen Canh Lich, “Consumption of goods in the full sense is a process of many activities: market research, consumer research, selection of distribution channels, sales policies and forms, advertising and promotion, and finally sales to customers” Philip Kotler defined “Personal selling is the process of achieving mutually profitable economic exchanges between buyer and seller, based on interpersonal contact between buyer and seller, and on the sellers persuasive communication of his product or service qualities and benefits to the buyer.” James.M.Comer stated Selling is the process of researching customer needs, designing and demonstrating products, negotiating, delivering and settling to provide the long term benefits for both sides 2.1.1.2 Definition of direct selling Scott R.Balfour stated that direct selling is the most direct form of selling goods and services from the sellers to the buyers without any fixed retail outlets 2.1.1.3 Definition of multi-level business Multi-level business is a form of direct selling With the development of multi-level business, there have been various approaches to defining this business form - In business: Network business (multi-level business, direct selling) allows companies to save costs for regional and provincial agents and agencies, small companies, retail outlets or product display, marketing, promotion and all costs related to distribution Multi-level companies can enjoy about 50% commission, the remaining is paid for distributors by automatic calculation The commission of distributors is mainly based on the number of distributors in the network and the sales figures - In laws of Viet Nam: In Clause Article of Decree 40/2018/ND-CP on managing business activities by multi-level method issued by the Government of Viet Nam on 13 March, 2018, “Multi-level business means a business activity run through a network of participants at levels and branches, which allows participants to receive commissions, bonuses and other economic benefits from their sale activities and sale activities of other people in the network.” Under 2014 Law on Investment, Annex 4: List of conditional business forms records the form of multi-level business In the thesis, the researcher takes the approach that: Multi-level selling means selling directly to consumers from distributors at different levels of multi-level enterprises after they perceive the product quality and want to recommend and sell products for economic benefits 2.1.2 Characteristics of multi-level business - Goods, prices and benefits - Distribution channels 2.1.3 2.1.3.1 2.1.3.2 - Sellers - Buyers Socio-economic impacts of multi-level business Economic impacts of multi-level business a, On State budget b, On enterprises and the society Social impacts of multi-level business a, On employment b, On consumers c, On living standards of particular multi-level business participants 2.1.3.3 2.2 2.2.1 2.2.1.1 Impacts of multi-level business on trade industry a, On other selling methods b, On State administration for socio-economic issues in trade industry and multi-level business Theoretical background on State administration for multi-level business Definition, objectives and roles of State administration for multi-level business Definition Based on some fundamental concepts, the researcher defines State administration for multilevel business is a component of State administration for trade, a directional and organized impact of State administration agencies at all levels on multi-level selling to achieve the predetermined objectives in particular environmental conditions and period of time Principal factors of State administration for multi-level business are formed as follows: Principal factors of State administration for multi-level business Administrative agents Legislative (central, local) Executive (central, local) Administrative issues Juridical (central, local) Formulating, promulgating documents Organizing the system, implementation of documents Instruments Methods Objectives Administrative objects Enterprises Participants Inspecting, handling complaints, violations Products (Source: Author’s illustration) Chart 2.7 Principal factors of State administration for multi-level business 2.2.1.2 Objectives of State administration for multi-level business First: Creating a stable and equal business environment Second: Ensuring the legal rights and benefits of distributors and consumers Third: Punishing violations in multi-level business 2.2.1.3 Roles of State administration for multi-level business a, Directing activities of multi-level business agents b, Establishing a competitive and trading environment c, Regulating market for multi-level business d, Supporting enterprises and settling disputes in multi-level business e, Supervising, inspecting multi-level business 2.2.2 Principles of State administration for multi-level business 2.2.2.1 Democratic centralism The principle requires clear regulations on the authority and responsibility as well as the “horizontal” coordination between Ministries of economics – trade administration and other relevant management agencies at the central and provincial level, the “vertical” cooperation in sectors between ministries and departments of economics – trade administration in the country 2.2.2.2 Unity of interests In managing multi-level business, it is essential to reasonably combine interests of the society (including the State), multi-level enterprises, participants, namely distributors and consumers 2.2.2.3 Efficiency With the aim to manage multi-level business efficiently, the State has to set clear and rational targets and directions for the development of multi-level business by utilizing principles and practices; Reduce management expenses reasonably; Focus on targeted administration methods; Assess administration practices regularly; Evaluate the management of multi-level business precisely as well as Review the practices of multi-level business administration timely 2.2.3 Issues State administration for multi-level business 2.2.3.1 Establishing legal normative documents, issuing technical and quality certificates for goods and services in multi-level business activities 2.2.3.2 Organizing administration system for implementing policies and regulations on multi-level business management, granting and withdrawing business licenses First: Organizing administration system for multi-level business Second: Implementing policies and regulations on multi-level business management Third: granting and withdrawing multi-level business licenses 2.2.4 2.2.4.1 2.2.3.3 Inspecting and settling complaints, disputes and legal violations in multi-level business Methods and instruments of multi-level business administration Methods State administration for multi-level business applies all three methods including economic, 10 administrative and educational methods 2.2.4.2 Instruments First: Regulations on multi-level business administration Second: Policies on multi-level business administration Some policies on multi-level business administration include Goods supply in multi-level business; Enterprises and distributors in multi-level business; Facilities for multi-level business; Human resources for multi-level business administration Apart from these two instruments, planning in multi-level business administration is also important, which partly guides the business and the administrators clearly present their management competency and vision The State introduces the forecasts and plans for supporting the development of multi-level business nationwide, inspections and violation handling 2.2.5 Criteria of State administration for multi-level business 2.2.5.1 Efficiency 2.2.5.2 Validity 2.2.5.3 Unity 2.2.5.4 Equality 2.2.5.5 Security 2.3 Factors affecting State administration for multi-level business 2.3.1 External factors 2.3.1.1 Economic factors 2.3.1.2 Cultural, political and educational level 2.3.1.3 Science, technics and technology 2.3.1.4 International integration 2.3.1.5 Multi-level enterprises 2.3.1.6 Participants (distributors) in multi-level business model and consumers 2.3.2 Internal factors 2.3.2.1 Competences of State administration system and personnel for multi-level business 2.3.2.2 Policies and regulations on multi-level business 2.3.2.3 Resources for State administration for multi-level business 2.4 Practices in State administration for multi-level business in some countries and lessons for Viet Nam 2.4.1 Practices in multi-level business administration in some countries 2.4.1.1 The United States 2.4.1.2 Japan 2.4.1.3 Malaysia 11 2.4.1.4 Singapore 2.4.1.5 China 2.4.2 Lessons on State administration for multi-level business for Viet Nam CHAPTER 3: SITUATION OF STATE ADMINISTRATION FOR MULTI-LEVEL BUSINESS IN VIET NAM 3.1 Overview on multi-level business in Viet Nam 3.1.1 Background for the introduction and development of multi-level business in Viet Nam - In the introduction stage in Viet Nam, there were no regulations on multi-level business - During the development period, there have been some regulations on multi-level business administration 3.1.2 Situation of multi-level business in Viet Nam in recent years 3.1.2.1 Goods in multi-level business First: Categories of goods Second: Prices Sales by categories Supplements Cosmetics Fashion Equipment Appliances Others (Source: Viet Nam Multi-Level Marketing Association) Figure 3.1: Sales by goods categories in multi-level business Third: Names and origins Fourth: Quality and value 3.1.2.2 Multi-level enterprises First: Number and structure of multi-level enterprises By the end of 2017, there were 36 multi-level enterprises operating in Viet Nam By October, 2018, 33 enterprises were in operation (Source: Author’s collection from statistics of Viet Nam Competition Authority) Figure 3.2: Number of multi-level enterprises 12 Second: Revenues of multi-level enterprises (Unit: billion VND) (Source: Viet Nam Competition Authority-Ministry of Industry and Trade) Figure 3.3: Revenues of multi-level business by years Ministry of Industry and Trade has concluded that the performance of multi-level enterprises is relatively limited with the average profit after tax of 2.2% and over 50% enterprises recorded loss The employment and income generation from multi-level enterprises was also unclear Third: Organization, rewarding and training for distributors of multi-level enterprises Nowadays, multi-level businesses are applying two main ways of distribution and sales, namely face-to-face selling and group selling in workshops Personal selling can account for 80% of transactions involving distributors getting goods directly from the companies and selling to the endusers Distributors in the multi-level business system can earn commission based on the performance of participants at the lower levels they form fairly 3.1.2.3 Multi-level business participants (Source: Viet Nam Competition Authority-Ministry of Industry and Trade) Figure 3.4: Number of multi-level business participants by years 3.1.2.4 Customers and locations of multi-level enterprises Multi-level business is conducted in all cities and provinces in the country, but mostly in Hanoi and Hochiminh City However, in recent years, the companies have expanded their business to rural and remote areas, which has attracted a large number of customers Many customers have found the products relevant and durable They could be mere customers without involving in marketing, sales, and distribution of multi-level business A lot of branches of multi-level businesses have been set up in provinces including those registered in multi-level business without specific head offices It has led to confusion, difficulties in management and administration of local authorities 3.1.2.5 Major violations in multi-level business Multi-level enterprises in Viet Nam mainly perform the following violations: + Requesting potential participants to pay a deposit or a certain amount of fees, buy a particular number of goods in any forms to gain access to the network + Deny commitments to rebuy goods at the price of at least 90% of the selling prices to participants + Give participants commissions, bonuses and other economic benefits mainly for luring other 13 people to join the network + Tie up capital of participants at lower levels + Provide incorrect information on the feature and usage of goods to enticing other people to join Moreover, multi-level enterprises in Viet Nam also committed other legal violations such as Operating in multi-level business without any licenses from the authorized State agencies; Violating regulations on product quality standard, origins, labeling, food hygiene and safety, multi-level business agreement signing, etc 3.2 State administration for multi-level business in Viet Nam in the period of 2006 - 2018 3.2.1 Functions, tasks and system of State administration for multi-level business 3.2.1.1 Functions and tasks of State administration for multi-level business - Regulations on the authorities and functions of Ministry of Industry and Trade, Viet Nam Competition Authority (Department of Investigation and Settlement of Unfair Competition) - At provincial level, Departments of Industry and Trade take the responsibility to support provincial and municipal People’s Committees to perform State administration for local multi-level business operations 3.2.1.2 System of State administration for multi-level business and the regulated functions The system of State administration for multi-level business is organized from the central to local levels as described in the following figure: Government Relevant ministries, agencies Ministry of Industry and Trade Competition Authority Provincial/Municipal People’s Committees Market Surveillance Agency Department of Industry and Trade District People’s Committees Market Surveillance Division Office of Industry and Trade Ward/ Commune People’s Committees (Source: Author’s illustration) 14 Figure 3.5: Organization of State administration for multi-level business State administration agencies for multi-level business are organized from the central to local level as regulated in Chapter VII Decree 40/2018/ND-CP According to Directive 30/CT-TTg dated 31 October, 2016 on strengthening State administration for multi-level business, the Prime Minister assigned Ministry of Industry and Trade to coordinate with ministries and agencies in managing multi-level business activities However, the human resources for State administration for multi-level business are facing difficulties 3.2.2 Practices of multi-level business administration in Viet Nam 3.2.2.1 Issuance of documents for multi-level business administration - Legislative bodies will be responsible for issuing documents on multi-level business administration at the Central level, in the local level, Departments of Industry and Trade will specified those documents relevantly - Laws, Decrees, Circulars: In addition to 2005 Law on Competition, according to the time and development of multi-level business in Viet Nam, regulations and policies regulating multi-level business include: Decree No 110/2005/ND-CP dated 24 August, 2005 on management of multi-level sale of goods; Decree No 120/2005/ND-CP dated 30 September, 2005 stipulating for handling violations of Competition Law; Circular No 19/2005/TT-BTM dated 08November, 2005 of the Ministry of Trade guiding some Regulations in the Decree No 110/2005/ND-CP; Circular 35/2011/TT-BCT of 23 September, 2011 amending and supplementing a number of provisions on administrative procedures in the Circular No.19/2005/TT-BTM; Decree 42/2014/ND-CP; Decree 71/2014/ND-CP; Decree 185/2013/ND-CP; Decree 141/2018 /ND-CP dated 08 October, 2018 amending and supplementing Decree 71/2014/ND-CP; Directive 30/CT-TTg dated 31 October, 2016 on strengthening State administration for multi-level business; Decree 40/2018/ND-CP 2018 Law on Competition does not include terms on multi-level business In addition, there are also documents issued by local governments of Hanoi, Dang, Hochiminh City, Cao Bang, Quang Tri, Kon Tum, Gia Lai, etc 3.2.2.2 Communication and education on multi-level business - Communication of certain knowledge on multi-level business is very important Therefore, Viet Nam Association of Multi-level business regularly holds paid courses to check legal knowledge on multi-level business distributors The Viet Nam Competition Authority, then organizes exams and grants certificates for those who pass the exams - The communication and intake of information are exercised mainly by enterprises 15 3.2.2.3 Implementation of documents on multi-level business administration The Government has given guidance on implementing multi-level business registration at the local level; organizing workshops, seminars and training courses on multi-level business; managing multi-level business participants Multi-level businesses are required to report to Ministry and Departments of Industry and Trade on their activities every months 3.2.2.4 Promulgations of the regulations on multi-level business administration: - Granting ,amending and supplementing Business Registration Certificates - Authorized agencies for inspecting, supervising and handling complaints and violations Viet Nam Competition Authority (Ministry of Industry and Trade) is authorized to deal with the inspection, supervision and settlement of violations in multi-level business The procedure of settling violations in multi-level business is executed under competition legal proceedings Viet Nam Competition Authority Submission of complaints Or Violation detection Agencies for Criminal case settlement Preliminary investigation Investigation suspension Official investigation Investigation conclusions Settlement decisions Execution Complaints Ministry of Industry and Trade Settlement decisions Complaints to courts Court decisions 16 (Source: Author’s illustration) Figure 3.8: Procedure of settlement of violations in multi-level business From 2009 to 2017, the Authority handled some illicit multi-level business operations as follows: Table 3.10: Settled illicit multi-level business cases Year Number of cases 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 4 (Source: Viet Nam Competition Authority -Ministry of Industry and Trade) - The inspection and settlement of violations in multi-level business were enhanced in 2016, 2017, 2018 (Unit: million VND) (Source: Viet Nam Competition Authority -Ministry of Industry and Trade) Figure 3.9: Penalties to some multi-level business companies in 2016 + Handling complaints in multi-level business Ministry of Industry and Trade has received a lot of complaints of multi-level business participants and consumers on cases in which they did not involve in selling but giving money and expecting to get high returns or they received low quality goods In particular, 100% of agreements on profit are not in writing, so there is no evidence for State agencies to handle the conflicts 3.2.3 Methods and instruments of State administration for multi-level business in Viet Nam - The State mainly uses legal policies, regulations and documents in managing multi-level business The legal regulations and documents introduced in the Central level and specified in the local level are the useful means for the State to regulate multi-level business The orientation for multi-level business in Viet Nam is still limited as planning is not applied in administration leading to difficulties for stakeholders in managing and handling problems in multi-level business Namely: - 2004 Competition Law; 2014 Investment Law; 2017 Criminal Code - Regulations on goods in multi-level business - Regulations on multi-level enterprises - Regulations on participants in multi-level business - Regulations on multi-level business licenses and post-inspection - Over the past few years, the State has applied administration, education in managing multilevel business, economic methods have been used but not very effectively 17 3.3 Assessments on State administration for multi-level business 3.3.1 Achievements 3.3.1.1 System and functions of State administration for multi-level business - The system of State administration for multi-level business is relevant and relatively fair - The system of State administration for multi-level business has fairly efficient operations 3.3.1.2 Methods and instruments of State administration for multi-level business Methods and instruments of State administration for multi-level business are effective 3.3.1.3 Issues of State administration for multi-level business The issues of State administration for multi-level business is stable 3.3.2 Limitations and causes 3.3.2.1 Limitations First: Limitations in the system and function assignment of multi-level business administration - The administration system has not been specialized The support and coordination of stakeholders are not clear, regular and proactive The assignment of functions and tasks of bodies is ineffective with limited coverage Second: Limitations in personnel for multi-level business administration Personnel in administration agencies for multi-level business is inadequate and unqualified The number of officers on multi-level business administration is small and unspecified Third: Limitations in communication and information in multi-level business administration - The communication and monitoring of multi-level business in the area are still weak and under-appreciated The disclosure of information on websites of Departments of Industry - and Trade is limited, especially multi-level business Local People’s Committees, Departments of Industry and Trade can only get the number of registered multi-level businesses, but not the underground ones They can not fully update the situation of multi-level business on their websites or inform local residents Fourth: Limitations in issued documents on multi-level business administration - Multi-level business is mainly managed under Decree 40/2018/ ND-CP on multi-level business and Circular No 10/2018/TT-BCT Few localities have issued detailed local - documents on regulating multi-level business Legal documents not keep up with current development, even the violations Regulated deposits are low at no less than 10 billion VND on the chartered capital There is - no requirement to be calculated based on the annual sales The multi-level business objects are limited to physical goods The trading and transfer of multi-level business networks, excluding acquisition or merger, - may lead to negative results and problems in handling violations There are few regulations on regular reports, notice of workshops, consultancy and product launch 18 Despite being amending towards closer administration, regulations on multi-level business have not covered every aspect of the business form, leading to some trade fraud Fifth: Limitations in implementation of documents on multi-level business administration - The clarity in the payment of commission, bonuses and other financial benefits The rebuy of goods The roles of code of conducts and code of ethics in multi-level business in Viet Nam have - not been appreciated, so many enterprises and participants have violated the laws There is a lack of resources for implementation Sixth: Limitations in inspection, supervision and settlement of violations in multi-level business - The inspection of multi-level business has not been planned, and regular It only takes place in case of complaints The system and personnel of inspection are limited in competence, which has not in parallel with the development and sophistication of unlawful behaviors - Inspection and handling violations in multi-level business lacks the close coordination from other stages - Inspection and handling violations have only focused on multi-level business registration certificates, types of goods, commission payment, among others - The inspection and handling violations are separated among different agencies The regulations on inspection and handling are not strict enough - Regulations on punishments are inadequate and lenient, so violators are not afraid of committing crimes - The non-transparent information on actual revenue from multi-level business allows companies to promote and confuse people In addition, the income from multi-level business is not controlled, leading to tax loss 3.3.2.2 Causes First: External factors - Socio-economic situation in Viet Nam - Cultural-political situation in Viet Nam - Science and technology in Viet Nam Second: Internal factors - The State - Participants, consumers and the public - Multi-level business companies in Viet Nam CHAPTER 4: SOLUTIONS ON PERFECTING STATE ADMINISTRATION FOR MULTI-LEVEL BUSINESS IN VIET NAM 4.1 Directions of State administration for multi-level business in Viet Nam 19 4.1.1 Socio-economic situation affecting State administration for multi-level business in Viet Nam - Viet Nam has further integrated and joined trade agreements in the region and in the world The common principle of trade relations is equality and indiscrimination, so the State should facilitate multi-level business and other trade business forms - The Government is guiding towards a tectonic government, the socio-economic development is built on the individual development, in which multi-level businesses have made great contributions in other countries In Viet Nam, State administration agencies should also regulate, utilized and exploit this form to bring the most economic benefits - The economic development in the world and Viet Nam has slowed down and multi-level business still encounters limitations due to the close administration, lack of specialized documents, weak personnel, inadequate coordination and cumbersome system, etc There is a need for the major changes in State administration for trade and multi-level business in particular - Industry 4.0 and the development of “sharing economy”, the expansion of the market and financial instruments, the non-stop evolution of e-commerce, etc are the favorable conditions for multilevel business and also the threats of illegal behaviors They pose great challenges to State administration for multi-level business in Viet Nam 4.1.2 Forecast of multi-level business development in Viet Nam - The number of multi-level enterprises will not increase sharply as before - The number of participants – distributors in the multi-level network will also tend to rise - Illicit forms of multi-level business have been eliminated with the closure of some major violators 4.1.3 Directions of State administration for multi-level business in Viet Nam in the upcoming period - Communication and education - Incentives and environment for the operation and development of multi-level business for distributors – participants to earn legitimate income - Further studies on the business model and lessons from successful cases - Protection of the rightful interests of distributors – participants and customers – consumers 4.2 Viewpoints, objectives and determinants on perfecting State administration for multi-level business in the coming period 4.2.1 Viewpoints - First: Maintaining the support to multi-level business registration and operations - Second: Learning from international lessons, establishing specialized regulations on multilevel business - Third: Promoting the administration for multi-level business of the State 20 4.2.2 Objectives 4.2.2.1 Creating a favorable and fair business environment for multi-level enterprises and participants 4.2.2.2 Ensuring close supervision on illicit multi-level business forms 4.2.2.3 Keeping up with the development trend of multi-level business and State administration in the world 4.2.3 Determinants - The State - Enterprises, participants and consumers - The society 4.3 Solutions on perfecting State administration for multi-level business in the coming period 4.3.1 System and functions of State administration for multi-level business - For Ministry of Industry and Trade, it is vital to organize a specialized unit for multi-level business administration - For Department of Industry and Trade, it is necessary to form work groups specializing in managing multi-level business under Office of Trade Management in the area - Provincial/ Municipal Division of Market Surveillance under the Central Department have to implement the documents in their areas, update the actual situation of multi-level business for relevant management methods - People’s Committees of provinces, districts and communes need to keep track of multi-level business in their areas The author highlighted the roles of local authorities in managing multi-level business - The State should raise the awareness of relevant agencies on their roles and responsibilities for multi-level business administration, especially Ministry of Health, Science and Technology, Finance, General Department of Customs in coordination with Ministry of Industry and Trade - It is essential to improve the accountability of agencies and officers of multi-level business administration - It is important to clearly separate the responsibilities of authorized administration agencies and individuals in the state agencies 4.3.2 Human resources and personnel planning for State administration for multi-level business - Supplementing personnel for multi-level business administration Enhancing training for officers to ensure the competence and professional qualifications to handle violations in multi-level business - Exercising the linking role of Viet Nam Association of multi-level business, Association of Consumer Protection in administration Connecting to the world’s Association of Direct Sales 21 4.3.3 Documents and regulations on multi-level business administration First: Legalize and redefine “multi-level business” Second: Regulate the authority to grant and withdraw certificates for multi-level business registration Third: Supplement regulations on multi-level enterprises Fourth: Build Code of Conduct or Code of Ethics for multi-level business in Viet Nam Fifth: Supplement regulations on multi-level business participants Sixth: Apply relevant multi-level business administration methods 4.3.4 Communication in multi-level business administration - Setting up a specialized agency for communication on multi-level business - Forming free Centers for Legal consultancy at local level - Raising awareness on legal regulations on multi-level business administration - Multi-level businesses should regularly inform distributors and consumers the knowledge on multi-level business, regulations on State administration fore multi-level business and improve the business ethics - Central and local authorities should coordinate with relevant agencies to give information on multi-level business through media - Agencies ought to enhance communication on legal regulations on multi-level business - Ministry of Industry and Trade cooperates with localities to regularly hold workshops on multi-level business administration 4.3.5 Inspection, supervision and settlement of complaints and violations - There is a need for the coordination of agencies in inspection, supervision, settlement of complaints and violation in multi-level business - There should be plans for inspection and supervision of multi-level businesses with specific documents and disclosure of settlement for improved transparency - It is important to engage citizens in supervising multi-level business - Authorities need to offer incentives and good conditions for well-performed multi-level business enterprises - Authorities must not prevent the development of legal multi-level businesses - Agencies can apply Industry 4.0 to State administration for multi-level business - Legal multi-level businesses are responsible for protecting their business as well as their participants against illegal harmful behaviors - It is vital to highlight the post inspection to multi-level business - It is essential to apply the effective Criminal Code and Competition Law CONCLUSION The thesis “State administration for multi-level business in Viet Nam” has fulfilled the research aims in 22 the following issues: First, clarifying theories and practices on State administration for multi-level business: Overview on multi-level business, State administration for multi-level business; Features, objectives, principles and roles of State administration for multi-level business; methods and instruments of State administration for multi-level business; fundamental issues of State administration for multi-level business; criteria of State administration for multi-level business; factors affecting State administration for multi-level business; practices and lessons for Viet Nam Second, analyzing and assessing State administration for multi-level business in Viet Nam including Development of multilevel business in Viet Nam ; Analysis of State administration for multi-level business in Viet Nam ; Conclusions and findings on State administration for multi-level business in Viet Nam Third, directions, viewpoints, objectives, determinants and solutions on perfecting State administration for multi-level business in Viet Nam: forecasts, directions, viewpoints, objectives, and determinants solutions on perfecting State administration for multi-level business in Viet Nam; some solutions on perfecting State administration for multi-level business in Viet Nam in terms of the system, instruments and methods, and the issues The thesis and the suggested solutions can be a useful resource for administrative agencies, researchers and enterprises to study and apply in their situations ... (2004), State Administration for Trade in the Current Context in Viet Nam, Doctoral Thesis, Viet Nam Institute of Economics; Vu Tuan Anh (1994), Roles of the State in Economic Development, Social Sciences... on multi-level business in Viet Nam Hoang Dao Thu Thuy (2012), Laws Regulating Multi-level Business in Viet Nam – Theories and Practices, Hanoi Law University; Le Anh Tuan (2006), Amending Laws... Viet Nam: Issues to Address, Jurisprudence Journal, Hanoi Law University, Vol.7, p.3-7; Le Bi Bo (2016), State Administration for Multi-level Business in Viet Nam, Doctoral Thesis, Vietnam Academy
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Xem thêm: Quản lý nhà nước đối với bán hàng đa cấp ở việt nam tt tiếng anh , Quản lý nhà nước đối với bán hàng đa cấp ở việt nam tt tiếng anh , Figure 3.9: Penalties to some multi-level business companies in 2016

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