China Times (www.chinatimes.net.cn) reporter Guo Haoyi Ge Aifeng reported in Shenzhen
A few days ago, the General Office of the State Administration for Market Regulation issued the "Notice on Verifying the Disguised Transfer of Direct Selling Business Licenses by Direct Selling Enterprises in the Form of Cooperation" (hereinafter referred to as the "Notice"), which pointed out that some direct selling enterprises reflected in recent public opinion have cooperated with other enterprises through affiliation, equity transfer, mutual cross-shareholding, etc., and are suspected of disguised transfer of direct selling business licenses, and further standardization and risk prevention. Among them, 4 companies, including EY (China) Health Products Co., Ltd. and Tianfu Tianmeishi (Xiamen) Biotechnology Co., Ltd., were "named" and required to be verified.
According to the requirements of the Notice, the market supervision department of the location of the above-mentioned enterprises is required to report the verification situation before November 30. As of press time, no company has publicly responded to this.
Under the many reshuffles, why has the direct selling industry exposed the chaos again? Wang Peng, an assistant professor at Chinese Min University, told the China Times reporter that the model of direct marketing has unique characteristics and advantages, and believes that the future development trend is still strong, but its natural defects in the system are easy to be exploited by lawbreakers and cause chaos.
In fact, with the advent of the new retail era, the direct selling industry is also accelerating its recovery in the norms. In recent years, many direct selling companies have "tested the waters" of new retail and social e-commerce and other new models, with the arrival of this year's "Double Eleven", the direct selling industry has also begun to launch a double eleven promotion war. So, can the direct selling industry, which takes advantage of the "potential" of the Internet, break the traditional impression of the outside world and access the fast lane of the new era sales model?
The market has undergone multiple rounds of reshuffling
Since the enactment of the direct selling legislation, the development of China's direct selling industry has gone through more than ten years, but many people still do not know its own concept.
According to public information, the "direct sales model" is an efficient marketing method that reduces the cost of product circulation and meets the needs of customers to maximize the interests of customers by removing middlemen. In other words, it is a sales model in which the manufacturer sells the goods directly to the customer without going through the middleman, reducing the intermediate links and sales costs. In addition, the product coverage of direct selling enterprises is very wide, and six major categories of products such as health care products, skin care products, and small household appliances can go through direct sales channels.
In fact, direct selling is a strictly controlled industry in China's market, and direct selling enterprises need to obtain a direct selling license issued by the government to operate. However, due to the strict requirements, many enterprises have given up applying for a direct selling business license and have carried out business in some similar ways to direct selling without being bound by the Regulations on the Administration of Direct Selling.
The "China Times" reporter found that at present, the Ministry of Commerce of China has announced a total of 89 enterprises with direct sales qualifications (including 32 foreign-invested enterprises), most of which are engaged in health food sales related business. Among them, there are 13 direct selling enterprises registered in Guangdong, plus 20 direct selling enterprises that have obtained direct selling regional licenses in Guangdong, accounting for more than one-third of the total number of direct selling enterprises in the country.
Why do most people in the direct selling industry do health care products? Chinese food industry analyst Zhu Danpeng pointed out to this reporter: "In fact, the entire health care products industry has long existed because of its high profits and many players, in the context of consumption upgrading, the development potential of the health care products industry has gradually emerged, the number of entrants has gradually increased, becoming the main group of the direct selling industry, so most of the enterprises that get direct sales licenses involve health products business." ”
It is worth noting that the supervision and regulation of the direct selling industry by relevant departments has never stopped.
In 1990, Avon set up a joint venture in Guangzhou, which was the first international direct selling company to enter China and the first enterprise in China to obtain a direct selling license. At the beginning of entering China, Avon quickly occupied the Chinese market with its direct sales model, and by 1997, the direct sales staff recruited by Avon once reached 350,000, creating 1 billion revenues throughout the year, you know, the revenue of Moutai that year was less than 600 million. At that time, "Miss Avon" became a veritable "direct sales sister".
In 1998, MLM activities were rampant, the government issued the "Notice of the State Council on Prohibiting MLM Business Activities", the direct selling industry was "one size fits all", ushered in the first "reshuffle", and Avon embarked on the road of traditional retail. During the same period, many direct selling companies closed, disappeared or exited direct selling, and the entire industry went down to a low point.
Over the years, although Avon has made various strategic and operational adjustments, it has been difficult to hide its decline. In 2021, the official system of the Ministry of Commerce withdrew Avon's direct selling license public information, which was once the holder of the 001 direct selling license, and eventually became an outsider in China's direct selling industry.
In 2005, with the promulgation of the Regulations on the Administration of Direct Selling and the Regulations on the Prohibition of Pyramid Schemes, direct selling became a franchise industry, and the direct selling market once again ushered in a "reshuffle". Due to the establishment of access thresholds, many small and medium-sized enterprises have not received this "ticket". Since the formal adoption of the direct sales license for market regulation, the direct selling industry has also ushered in a period of rapid development for more than ten years.
But behind the growth, the entire industry has also bred chaos such as false propaganda, exaggerated propaganda, and involvement in rumors. At the end of 2018, the Quanjian incident broke out, and the problem of violations of laws and regulations in the entire direct selling industry was highlighted. In 2019, the State Administration of Market Regulation and 13 departments launched a 100-day action to rectify the chaos in the health care market. This year, the domestic health care market and the direct selling industry also ushered in unprecedented strict supervision, and the direct selling market once again fell into a slump.
On September 30, 2021, the State Administration for Market Regulation drew a red line to the "cooperation" of direct selling, and issued the Notice on Verifying the Disguised Transfer of Direct Selling Business Licenses by Direct Selling Enterprises in the Form of Cooperation, requiring all provincial market supervision departments to conduct a thorough investigation and mapping of direct selling enterprises registered in their own provinces (autonomous regions and municipalities), and sort out and investigate the contents of the investigation, including: the change of equity of direct selling enterprises and the establishment of holding subsidiaries since 2019; whether the partners and related parties of direct selling enterprises have affiliated direct selling enterprises, in the name of direct selling enterprises, Engage in direct selling activities with the help of direct sales license influence. At this point, the way of "curve winning cards" no longer works.
Nevertheless, the health care market did not shrink during and after the reshuffle of the direct selling market. According to the latest data from enterprise inspection, there are currently 2.6669 million health care product-related enterprises in China. Among them, marketing enterprises are mainly (wholesale and retail enterprises), which account for more than 75%. In the past ten years, the number of registered health product enterprises in China has increased year by year. From January to September 2021, there were 472,000 new health care product enterprises in China, an increase of 24.09% year-on-year.
Zhu Danpeng reporter said that with the continuous improvement of people's living standards, the consumption of health products is also paying more and more attention, and as the younger generation of consumers join the "maintenance" army, the demand for the health care product market gradually grows, the entire track ushered in a high development, high outbreak node, I believe that with the direct selling industry to establish and improve the management system and management mechanism of standardized operation, the future of health products market participants only increase.
Where is the road for direct selling companies?
Stumbling, where is the future direction of the direct selling industry?
In 2019, when direct sales have once again fallen into a trough, social e-commerce has ushered in an explosive period. Under the pressure of strong supervision and public opinion, the transformation and development has also become the plan of many direct selling enterprises, so many direct enterprises have "tested the waters" of new models such as new retail and social e-commerce.
In May 2019, the Guangdong Provincial Market Supervision and Administration Bureau issued the "Several Opinions of Guangdong Province on Further Strengthening the Supervision of Direct Selling Enterprises and Promoting the Healthy Development of the Direct Selling Industry (Draft for Comment)", which in addition to the regulatory requirements for regulating the production and operation of direct selling enterprises repeatedly emphasized by the regulatory authorities, also put forward "supporting direct selling enterprises to use emerging methods such as social e-commerce to conduct business".
Since then, there have been more models in the market that direct enterprises have transformed into social e-commerce or combined with social e-commerce. In the past two years of "618" and "Double Eleven" activities, it can be seen that the popularity of health care products. The data shows that the overall sales of the direct selling industry in January and August this year achieved growth, and the value of the direct selling brand has improved, of which the marketing performance of health care products, cosmetics, personal care products and other products has increased year-on-year, and the direct selling enterprises that have worked in the field of "health and health care demand" have gained the most.
With the advent of "Double Eleven", the direct selling industry has also begun to launch a double eleven promotion war. So, can the direct selling industry, which takes advantage of the "potential" of the Internet, break the traditional impression of the outside world and access the fast lane of the new era sales model?
Wang Peng believes that the Internet has left sufficient room and opportunities for the development of direct sales, with technical tools, or with the help of the Internet development, or can enhance the breadth and breadth of direct selling business. Therefore, in addition to maintaining product advantages, direct selling enterprises should also strengthen the update of technology and constantly integrate with new marketing tools and marketing methods.
"We can see a lot of achievements in the process of direct selling enterprises transforming new retail and social e-commerce models, but there are also some issues worth paying attention to." Wang Peng told this reporter that social e-commerce and micro-businesses were in a state of barbaric growth and unclear levels in the early stage of development, and member distribution social e-commerce was frequently suspected of pyramid scheme controversy and questioning, and in recent years, there have been countless cases of economic penalties and penalties imposed by the regulatory authorities for "involving transmission", which can be said to be more than enough compared with the direct selling industry.
At the same time, the social e-commerce road of direct enterprises is also "foggy". In recent years, the rise of models such as vibrato, kuaishou short video, and live broadcasting has swallowed up the dividends of the social e-commerce community, and the boom in the social e-commerce track has gradually faded. Since the beginning of this year, there have been only a few financings for social e-commerce.
Wang Peng suggested that the standardized development of the direct selling industry should be implemented in terms of dealer management, credit supervision, and long-term supervision mechanism. At the same time, direct selling enterprises should formulate long-term strategic planning, can not engage in speculative behavior, return to the essence of direct sales, and improve the quality of the business team.
![The road ahead is long[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)