What kind of industry is direct selling?

Sales is the abbreviation of multi-level direct selling, which is also called direct selling abroad. It has been five or six years since it was introduced to China, but it has really attracted the attention of all parties concerned for only nearly two years. Therefore, we have to admit that, in general, both management units and academic units have a superficial understanding of direct selling. A more realistic attitude is to get rid of preconceived ideas to understand and analyze direct selling and try to evaluate direct selling comprehensively and objectively.

Direct selling has been developing at a steady speed since it came into being 50 years ago. Today, direct selling exists in more developed countries and regions in the world. According to the statistics of the World Direct Selling Federation established by 1978, the direct selling turnover of 4/kloc-0 member countries or regions of/kloc-0 in 1994 was US$ 63 billion, of which the direct selling turnover accounted for about 50%. At present, Egypt, Venezuela, Colombia, Serbia and other countries are applying to join the World Direct Selling Federation. Some of the world's largest companies have businesses all over the world on five continents, forming a trend of operating in China.

What I mean by this situation should be self-evident: what we are facing today is a global image and a global development trend. No matter how we look at direct selling, we can't ignore this fact. Some domestic media have reported that direct selling is a prohibited industry abroad, which is obviously misinformation. Objectively speaking, there are still some countries in the world that do prohibit direct selling, such as Singapore; Some countries have not started to develop direct selling, such as most countries in Africa. The latter situation is easy to understand. In places where the problem of food and clothing has not been solved, it is not only direct sales, but also many things in the world market economy that they have never heard of. The situation in Singapore has its own special factors. As a small urbanized country with a population of only a few million, it has a small population and a small area. Shop-style sales have covered the whole country, and obviously do not have the economic and social basis for developing direct sales.

It is undeniable that the development of direct selling in the world has indeed gone through a tortuous road. It can be said that in almost all countries and regions, the development of direct selling has been hotly debated. The result of the dispute between prohibition and release is legislation. This is almost a rule in the history of direct selling. Understanding this point is of extraordinary practical significance to our country.

So, what industry is direct selling? I want to summarize it with the following characteristics:

First, direct selling is a form of sales, which belongs to the category of sales industry. This form developed late and is quite special. Different from the general sales form, the opposition between buyers and sellers is very obvious. It makes consumers have the opportunity to engage in sales activities while consuming, and transforms them into special roles of both consumers and sellers, and obtains income.

Second, direct selling is an industry that provides more entrepreneurial opportunities. Any industry provides employment opportunities, but the difference of direct selling is that it provides a highly flexible employment opportunity, because everyone involved in direct selling is not an employee of the company, and he can decide how much time and energy to spend on it. Its particularity enables many people to exert their greatest potential.

Third, direct selling is an industry that can promote society. First of all, direct selling is an active sales method, which is much more efficient than traditional passive and waiting for customers, and provides conditions for the rapid turnover of social reproduction; Secondly, direct selling is a sales method with training as the main means, which is conducive to improving the quality of consumers and guiding the healthy development of consumption; Thirdly, direct selling emphasizes personalized service, which is conducive to improving the service level for consumers; In addition, a strict direct selling network can form a barrier to counterfeit goods, which is conducive to the society's resistance to counterfeit and shoddy goods.

Fourth, direct selling is an industry that indicates the future development trend of society. Because it embodies the characteristics of networking and flexibility of social organizations, which is a common fact in economically developed countries. For example, a person can do multiple jobs, with flexible working hours and diversified social organizations. For our country, some phenomena have already appeared, and some phenomena may appear soon.

Of course, people can also summarize direct selling from various angles. But in any case, as long as it is realistic, I think I will not deny the above statement. In fact, only by acknowledging the above points can we understand the development of direct selling in the world.

This does not mean denying the shortcomings of direct selling. As we can see now, any economic category, or any economic affairs, may have two trends of economic development and social development. For example, if stocks, real estate, futures and other industries are allowed to exist, we cannot deny the existence of speculation, nor can we rule out stock market manipulation, fraud, eat small fish and even suicide. Now people have all kinds of accusations about direct selling, such as nonstandard enterprises, tax evasion and fraud. In my opinion, the above phenomenon does exist, but we can't deny direct selling. Because in any industry, there are good enterprises and bad enterprises. It is impossible for us to judge the nature of the industry according to the behavior of bad enterprises. If we follow this line of thinking, we can deny all other industries.

So, how to solve such a complicated problem? I think legislation is the best way.

(A) pros and cons: the debate on direct selling legislation

Legislation to manage direct selling is almost the consistent idea of the development of direct selling industry in all countries of the world. It has been recognized that China must attach importance to legislation in order to develop a market economy. Strangely, the old concept of direct selling is very stubborn in dealing with the direct selling industry. So the idea of banning direct selling has existed for several years, and sometimes it is quite strong. There are mainly the following kinds of remarks that need to be banned.

First, "direct selling is an industry that has been banned abroad". I said it before, and I won't repeat it.

Second, "Direct selling is a fraudulent industry." Some people use direct selling to cheat, which is not necessarily related to the nature of direct selling. It is true that some companies are cheating consumers with direct selling, but there are also direct selling companies that bring good goods, good services, good training and good opportunities to consumers. Legislation should be passed to protect good companies and crack down on illegal companies, rather than indiscriminately.

Third, "Direct selling is a profiteering industry". This is a specious statement. Because, how much profit can't be divided by industry. In the economic field, under the action of the law of average profit rate, the profit rates of different land industries tend to be average. When there is a big difference in profit rates between industries, there will be capital flow between industries, so that profit rates will start to average again. This cycle of regular operation makes the profit rate of different industries have little difference. However, this does not rule out the huge differences in profit margins between different enterprises. In any industry, the profit level between enterprises will vary greatly. This reflects the different management levels among different enterprises, which is also a very normal phenomenon. So it is unfair to simply say that direct selling is a profiteering industry. In fact, in countries with more developed direct selling, the capital attracted by direct selling is limited, and its market share is also limited, never exceeding 1%, which also shows that the profit of direct selling is normal from one side.

Fourth, "Direct selling is an unfair way of competition." I think this statement is beginning to approach the idea of judging direct selling. Because, under the condition of market economy, whether a marketing method is allowed to exist should be based on whether it conforms to the principle of fair competition. So, does direct selling conform to the principle of fair competition? According to the Anti-Unfair Competition Law of People's Republic of China (PRC), it can be said that none of them can be used to deny direct selling. Therefore, the essence of the problem is whether legislation can make direct selling a legitimate way of competition. Because, without legal constraints, any economic form may become the carrier of unfair competition. At this point, direct selling is no different from any other marketing form, but we are unfamiliar with direct selling.

Fifth, "direct selling will evade taxes" and "direct selling will provide conditions for counterfeit and shoddy goods". If you are impartial, anyone can see the logical error of these statements. Can't other industries solve the above problems?

Obviously, at present, many reasons for denying direct selling are untenable. However, this does not mean that the direct selling industry is perfect. On the contrary, direct selling has many inherent shortcomings, which shows the necessity of legislation. However, it seems that many people still think it is simpler and more comfortable to ban direct selling. In fact, prohibition does more harm than good to the country, enterprises, consumers and the whole society.

First of all, the ban has no legal basis. Therefore, these measures will have a negative impact on the image of the government. Judging from the existing laws, there is no legal basis for prohibiting direct selling. Because direct selling is only a marketing form, it is obviously unreasonable to ban a marketing form in theory. Compared with the provisions of People's Republic of China (PRC) Anti-Unfair Competition Law, it is difficult to define direct selling as a form of unfair competition. August 1994, 10 The notice of the State Administration for Industry and Commerce only explicitly stopped the illegal activities in multi-level direct selling activities, which can be said to be the difference between direct selling and illegal activities. At present, Shanghai's direct selling management method has been tried out for more than half a year, and Guangzhou has also explicitly approved several direct selling companies to carry out business. In this case, if there is no sufficient legal basis, the consequences of the ban may make people lose trust in the government's policies and management.

Secondly, it is difficult to achieve the effect of Qin in the goal. The goal of the ban is of course to make this form disappear in the market. However, judging from the characteristics of direct selling, I am afraid it will be counterproductive and may be banned. Without the light, the dark will be worse. Because direct selling sells goods by word of mouth. By then, not only will direct sales be unbearable, but the state will not even receive a little tax; Moreover, the goods sold at that time were not true or false; The interests of consumers are more difficult to protect; Only those unscrupulous profiteers will benefit, and legitimate businessmen can only look at the market and sigh. Some countries in the world tried to ban it, but failed to really eliminate the existence of unfair direct selling. This lesson is worth learning.

Thirdly, it is bad for the image of China's reform and opening up. China, which is facing international integration, seems to have no need to shut out the marketing forms that developed countries have developed for decades. Moreover, foreign investors are selling hundreds of millions of dollars, and most of them expect to do business honestly in China. Of course, there are indeed foreign businessmen who make money in the world, and there are also many who want to deceive people. The direct selling companies that are really optimistic about the mainland have a lot of investment, especially fixed capital investment. Some companies have invested nearly $100 million, while those profiteers who deliberately make a ticket and leave have invested very little, and the investment is basically working capital. If direct selling is completely banned because of the practices of some profiteers, then those who really invest will be the hardest hit. Obviously, this will do more harm than good.

Finally, prohibition is not the best choice for social stability. In the event that the direct selling enterprises have closed down, there has indeed been a situation that endangers social stability. This may be a reason for the ban. However, there are some things that we should not simplify. At present, there are almost 10 million people in the direct selling industry, most of whom are direct sellers in government-approved direct selling companies. Prohibition is undoubtedly unfair to them, which in itself will cause instability. This is one of them. As mentioned earlier, the direct selling industry can provide employment opportunities. At present, there are indeed many unemployed and semi-unemployed people who have obtained employment opportunities in direct selling. Therefore, direct selling also has a stabilizing effect on society to a certain extent. This is the second one.

In this way, direct selling is neither an industry that should be banned nor an industry that can be banned. For social industries and society, the best choice is to legislate to manage direct selling, release its beneficial functions to society and curb its possible disadvantages. If so, the market is lucky, the society is lucky and the country is lucky.

(B) Temper justice with mercy: the choice of legislative management

Legislation is a management idea, but whether legislation is strict or broad also needs to be carefully studied. In my opinion, in view of the fact that the form of direct selling has not entered our country for a long time, all parties should not have a deep understanding of it. In order to prevent unscrupulous businessmen from taking advantage of loopholes, we should strictly grasp the legislation and specify the restrictive conditions of direct selling in detail.

The legislative management of direct selling should embody the following principles:

First, unify standards. Now the understanding of direct selling can be said to be quite confusing, but one thing is almost the same, that is, different people have their own standards for the objects they rely on. Like a blind man touching an elephant. Therefore, it is very important to unify the standards of direct selling. Some places say that direct selling is not good, but it can be done. Direct selling and pyramid selling are both direct selling in English, but they are different in Chinese translation. Some people translate it into pyramid selling, while others translate it into direct selling. This is not the essential difference. We should define this marketing method accurately and divide it by the behavior of the enterprise, not by the name. Only in this way can it be possible to curb possible chaos.

Second, distinguish between authenticity and falsehood. In legislation, we must use clear standards to distinguish between legal direct selling and unfair direct selling (mouse society). Because the system is very important in the operation of direct selling. Unscrupulous businessmen use loopholes in the system to implement improper direct selling. Therefore, the direct selling system should be clearly defined and this short-sighted approach should be prohibited. In fact, although the development of direct selling in China is not long, it is fully capable of distinguishing the authenticity of direct selling in legislation and managing the direct selling market according to the current legal environment, information and government management level.

Third, control the quantity. In our country, there is a phenomenon that has been puzzling the economic circles, that is, the phenomenon of "rushing to the bees". Things imported from abroad often blossom everywhere in China at once, so even the best things will make people feel different and their reputation will deteriorate. Direct selling has such a sign. Therefore, the number of direct selling enterprises should be limited by total control. Set a certain quota for direct selling companies across the country and control the examination and approval.

Fourth, centralized examination and approval. The management of direct selling industry should be centralized in the early stage, so as to ensure that direct selling will not develop blindly. It is suggested that the state make it clear that the administrative department in charge of commodity circulation in the State Council is the competent department in the direct selling industry, which is responsible for reviewing the qualifications of applicants, approving companies and managing the whole industry.

Fifth, improve qualifications. Enterprises applying for direct selling should be strictly weighed. It is suggested that higher standards should be set for the qualifications of direct selling companies, and regulations should be made in terms of registered capital and product types. In addition, we should also make some restrictive provisions on foreign direct sales according to the relevant provisions of the national foreign-invested enterprises and retail policies.