Excuse me, is Huaya International a pyramid scheme?

Is Huaya International a pyramid scheme? Before answering this question, it is necessary to clarify the definition of MLM in national laws: MLM refers to the behavior that organizers or operators develop personnel, calculate and pay remuneration to the developed personnel based on the number of personnel or sales performance directly or indirectly developed by them, or require the developed personnel to obtain the qualification to join on the condition of paying a certain fee, seek illegal interests, disrupt economic order and affect social stability.

At present, most MLM companies repackage and confuse the business models of direct selling and MLM to build channels. Therefore, by correctly distinguishing between direct selling and pyramid selling, we can judge whether a company's business behavior belongs to pyramid selling.

Direct selling itself is a normal business behavior of enterprises, which is essentially different from pyramid selling.

Difference 1: Is there an admission fee?

Illegal pyramid schemes usually have several obvious characteristics. The first is whether there is a relatively high entry fee. Some illegal MLM companies will charge a hard entry fee ranging from 300 to 1000 yuan. Of course, there are also some "smart" illegal pyramid schemes, and they will have other flexible forms, such as charging hundreds to thousands of dollars for initial subscription. It is understood that these illegal pyramid schemes participants get the qualification to join, introduce or develop others by paying the membership fee or paying the membership fee in disguised form by subscribing for goods, and get a return. In a regular direct selling company, there is no such fee.

Difference 2: Do you rely on high-quality products?

This is also the fundamental difference between illegal pyramid selling companies and direct selling companies. Illegal pyramid schemes often rely on worthless but expensive products. A set of cosmetics worth only tens of dollars can sell for hundreds or even thousands of dollars. It is worthwhile to standardize the product pricing of direct selling enterprises.

Difference 3: Is the product in circulation?

Illegal pyramid selling enterprises are just a kind of "crowdfunding" game, and the high admission fee plus low-quality and high-priced products that cannot be circulated in the market will not last long. Their sales method is to let all the entry-level sales representatives subscribe for products, but these products are not in circulation in the market, but only as samples or promotional materials for the next salesperson. In the end, all the salespeople have one hand, and the products are not circulated or sold in the market at all.

Moreover, the income of these illegal pyramid schemes organizers mainly comes from the entry fees paid by participants or the fees paid in disguised form by subscribing for goods. Because the products are not in circulation, most of the organizers use part of the fees paid by the late participants to pay the remuneration of the first batch of participants in order to maintain their operations.

However, direct selling companies are completely opposite. On the one hand, the products of enterprises require good quality; On the other hand, products sell well in the market. For direct selling enterprises, the quality of products is the fundamental reason to determine the sales volume of products, because the distribution channel of products is from manufacturers to customers through marketing representatives, with no other links in between and few advertisements.

Difference 4: Is there a return guarantee system?

It is understood that once the illegal pyramid selling products are sold, they cannot be returned, or they try their best to set obstacles for repeat customers.

This is completely different in direct selling enterprises. All regular direct selling enterprises will provide customers with perfect purchase protection. For example, general customers can get 100% cash back if they promise to return products that still have sales value within 7 days after purchase. For high-quality customers, some direct selling companies also promise to return products that have been used or have no sales value within 10 days (at least half of the remaining amount), and get 50% cash refund or 50% equivalent purchase amount.

Difference 5: Has the sales staff structure surpassed?

Illegal pyramid selling companies that make profits by attracting people often present a pyramid structure among sales staff. This sales structure leads to whoever comes first. At the same time, the first batch of participants get income from the membership fees paid by the members who are developing offline, and the amount of income is determined by the order in which they join. As a result, the first participants are always ahead of the latecomers.

This kind of unsurpassability does not exist in direct selling companies. In direct selling companies, no matter whether the participants join or not, the income is "more work, more gain".

Difference 6: Is there a store operation?

After the comprehensive rectification of MLM in China by 1998, many foreign direct selling enterprises have been transformed. Since then, the mode of "store hiring salesman" has become the main sales mode to standardize direct selling enterprises. This special way of direct selling makes salesmen subordinate to stores, which is not only directly related to the company, but also convenient for management.

Illegal pyramid selling enterprises often stay in the state of developing personnel, organizing networks and having no shops to engage in business activities. Until today, the existence of shops is still an intuitive difference between illegal pyramid selling and direct selling in China market.