What is MLM like?

What is MLM? MLM means that MLM organizations sell or provide services through multi-level (MLM) and independent MLMs. In addition to selling goods to earn profits, each MLM member can also introduce and train others to become new MLM members and establish a new sales network to sell the company's goods. While the company gets more profits, each MLM member also gets the corresponding price difference in its own sales network. MLM is popular all over the world, so MLM enterprises get the difference profit of a large number of goods, not the commission. It is precisely because of the huge commercial profits of pyramid schemes that some unscrupulous businessmen use pyramid schemes to carry out illegal pyramid schemes, turn legal pyramid schemes into illegal forms such as "network chains", collect money in disguise, and defraud the masses, thus triggering various crimes with the pursuit of property as the core of illegal pyramid schemes. Almost everyone in China thinks that pyramid selling is a trick of swindlers, at least the media thinks so. But before you come to a conclusion, can you ask yourself one more question? "Why can't you hear the opposite opinion?" Can we trust our own judgment when there is only one voice? And this is an industry that we are not familiar with. I have read almost all the reports about pyramid schemes. When we saw the candid video from CCTV, we saw with our own eyes that they were cheating, so we didn't have to hide it. We have all "seen" the essence of pyramid selling, but have we really "seen" it? Why do I say that? When I finished studying Economic Management (my first major), I became interested in MLM, which just landed in China. After that, I followed it for six years. The study of MLM originated from the genius idea of two mathematics students in Harvard University. At first, I just studied multiplication. For example, the mathematical model of 1 variable 2 and 2-variable 4 was later quoted by marketing and became MLM. In fact, it has been explored in the United States for many years, and the names are not uniform. Some are called direct selling. It was not until 1979 that the United States formally enacted the Anti-MLM Law, which was formulated according to the rules of Amway, the world's largest MLM company and the first MLM company. The United States has established the legal status of pyramid selling, making pyramid selling popular all over the world, but every country has a repeated process when it comes to pyramid selling. I was inexperienced at first. I don't know how to standardize management. This is actually a test of the IQ of a country's administrative department. Our country is no exception. Since the early 1990s, it can be said that it is trembling. The State Administration for Industry and Commerce issued many documents, but it was useless. The document forwarded by the State Council was also written by the State Administration for Industry and Commerce. At this time, several phenomena of competing for management rights appeared. As we all know, our administrative departments all have departmental interests, and we all hope that our hands can be longer. Therefore, the initial establishment of "San Guan" 1 is the State Administration for Industry and Commerce (in charge), 2 is the State Economic and Trade Commission (at this time, Premier Zhu is engaged in the General Economic Commission and the Small Planning Commission), 3 is the Ministry of Domestic Trade (now changed to the Domestic Trade Bureau and placed under the State Economic and Trade Commission) and the Ministry of Commerce (the former Ministry of Commerce will be abolished, it doesn't matter), and it has been planned for a long time. I am lucky to have the first issue of this magazine. The MLM companies that have just landed are all foreign companies, such as Amway Group in the United States, Sunrider Company in Taiwan Province Province and Shuang Ankang International Organization. But the reality is that we regard Taiwan Province Province as a foreign company. All the above are well-known MLM companies and members of the World MLM Alliance. Many problems appear in Taiwan Province companies, but American companies also have some problems. For example, Sunshine Reed was investigated by the Ministry of Health at 1994, and the first climax of the investigation appeared at 1994 to 1995, such as Wheat Straw Company. Hongtai company, etc. I have carefully analyzed the reasons, for example, wheat straw violates food regulations, and Hongtai's pyramid selling products are jewelry, which undoubtedly violates the banking law. A large number of other companies have also been investigated. What products can't be pyramid schemes, this is what I want to find out, such as drugs, precious metals and their products, these restricted substances, as well as weapons, drugs and other substances controlled by the state. Generally speaking, MLM products are health care products. At that time, the health care products market in China was very hot. However, the legal definition of health care products is not clear enough, so many health care products manufacturers and businesses mislead consumers to publicize the medical efficacy of health care products (of course, this is not limited to pyramid schemes). MLM people often say that kitchen knives can cut vegetables and kill people. Is it forbidden to sell kitchen knives just because they may become weapons? The position of this proposition is that pyramid selling is not useless, so what are its benefits? We can't know the truth from the news media. I have worked in radio myself and know the truth of the news. ) I am lost in thinking. Before solving this problem, I might as well know the opinions against pyramid selling. I heard Wang Xiaofeng, governor of Hainan Province, say on CCTV-2: (I believe this represents the views of many administrative cadres) "MLM is like" delivering a parcel ". Once the drums stop, anyone will be unlucky. "My research on MLM started with a mathematical model, and then I made a graphic analysis from the perspective of economics. Governor Wang's metaphor has no merit, but it has great influence. The so-called "passing parcels" has never been played before, and I have probably seen it. The people here are static people, and they don't increase with the passing. Therefore, there are always people with flowers in their hands. To make matters worse, because the number of people is static, everyone is in danger of being obtained by them (except those who beat drums, he is the safest) and the number of pyramid schemes is growing dynamically, which is feasible in theory. From a demographic point of view, apart from disasters such as war and large-scale diseases, two people combined to give birth to 1 person, and then combined with another 1 person to give birth to 1 person. This continues for several generations, and the scale map comes out. The geometric multiple growth of population is the core part of Malthus' population theory, which provides new ideas for marketing experts. The theory of pyramid selling came into being under this background. Of course, if we want to describe the mathematical principle of pyramid selling more clearly, it is a very complicated topic. You know, I am a Ph.D. student at Harvard, and I turned my direction to study the marketing process and cultural sources of MLM. I spent nearly three years on it. Next, I will uncover the marketing process of pyramid schemes, that is, "Who owns the money for pyramid schemes?" This is a difficult and easy question to answer. Let's look at the assumptions of traditional marketing (differential marketing): the manufacturer is A, the general agent is B, the provincial wholesale is C, the intermediate wholesale is D, the county-level small-scale wholesale is E, and the consumer is F. Flowchart: A( 1)-B(2)-F products have completed a cycle from A to F, in which B, C, D and E are all in the middle. For example, if 1 yuan is given to B (including the cost of 0.7 yuan) and B is given to C, the price may be increased to 1.5 yuan C gives D for 2 yuan D for E for 2.5 yuan E for F, and 3 yuan has changed from 1 yuan to F, so where is 2 yuan? B, c, d and e, of course. Is this reasonable? We will say that this is reasonable. Why? Because the logistics link has to make money. In other words, the logistics link that does not create material wealth should make money from F. Let's look at pyramid schemes. At the beginning, the theoretical design of MLM was like this. F get goods directly from A, or add B at most, to reduce or even eliminate logistics links. However, please note that ~ ~ ~ ~ F is still 3 yuan. This is the beauty of MLM theory design. Where is the beauty? If F only gives A 1 yuan, then it is not as good as the traditional marketing economy to see where the extra F 2 yuan money went. On the basis of traditional marketing, B, C, D and E are allocated 2 yuan with extra F to pay the basic maintenance expenses and profits of logistics links. B, C, D, E all need stores to store goods. Health expenses, industrial and commercial tax, staff salaries, transportation expenses, etc. all come from these two dollars, so we say that the excess F is reasonable in the two dollars, and A is deducted from the manufacturer's cost by 0.7. Now MLM has changed the distribution rules, only A and F, F is still from 3 yuan, but A only takes 1 yuan, and 2 yuan? Give F's online (terminology: referrer) a basic foothold. Since F took three dollars from E, why can't F take three dollars from A? But only 2 yuan's distribution object has changed. China people's psychology is influenced by traditional culture. Little people talk about profit, and adults give lectures. "You are my relative and friend, how can you earn my money?" Many people can't accept this way of making money, and would rather make money for an unknown e. This was unexpected by mathematicians and marketers who originally created pyramid schemes. What is clear here is that there is no essential difference between MLM design and traditional marketing. MLM is to earn money that should have been earned in logistics. Some people may ask: since you have made MLM so wonderful, why does the country ban it? Good question. This is also a subject that I have been thinking about. I began to study this problem from 1998. We go back to 1996. Remember MLM research magazine? Since its birth, it seems that MLM is on the right path. The rectification of 1995 has just ended (the State Council once forwarded the notice of the State Administration for Industry and Commerce on suspending MLM enterprises) 1996. Special approval 4 1 enterprises to enter the MLM industry. In the same year, the Ministry of Internal Trade established the Marketing Society MLM Branch, and the MLM industry ushered in the first spring. However, the problem came out. With a population of 654,380+0.2 billion, only 4 1 other enterprises are allowed to declare in the MLM office of the State Administration for Industry and Commerce every day. Under great pressure, the national government (hereinafter referred to as "the national government") liberalized hundreds of enterprises and delegated power to the provinces, but it still made restrictions. Things are often far from the starting point. There are local interests and local protectionism. Moreover, restricting domestic sales in the province is also empty talk. For example, if I go to Shandong on business, I can't buy it locally? What has the market economy become? So foul and electric shock companies keep appearing, and spring is always so short! When MLM entered the ice age, it was a mixed bag of good and evil people, and what kind of enterprises could get the provincial card. There are many leather bag companies. At this time, the country is still relatively unfamiliar with the MLM industry, and many laws and regulations simply can't keep up, so Li Lanqing sent two researchers from the State Council Development Research Center to investigate 1997, and I just had the opportunity to learn about it. Two of them are in a company in Zhongshan, Guangdong, and I rushed to Zhongshan. It happened that they had finished their research and had to catch a plane. I only got a first draft of the research report they wrote to Li Lanqing. After careful study, it is found that the fundamentals are still relatively positive. "Call for legislation to regulate the pyramid scheme market and vigorously crack down on illegal pyramid schemes." This has brought a glimmer of light to the frozen MLM industry. I visited the boss of Zhongshan Company and found that this is a pyramid scheme company with state-owned background. The boss assumes that pyramid schemes should be divided into internal and external points, and he plays the national card. At this time, my second major (accounting) also graduated. I made a decision to work in this company, but if I can read all the documents, I won't be paid. I will be sent to a branch office as the Commissioner of Education at headquarters to assist in the work. I want to really understand how the company operates. As a result, I went to Gansu branch and stayed in Lanzhou for three months. The owner of the branch is from Zhejiang, and we get along well. But I know that he has been very wary of the commissioners sent by my branch and headquarters. I can understand that, even so, I still got what I wanted (these topics will be written later, but I still say MLM). Since 1998, pyramid schemes have been banned, but there are still so many companies and personnel engaged in pyramid schemes. Why is it so big? I'm beginning to wonder. Once you are curious, you must find out, so you choose to go to Beijing, Zhengzhou, Wuhan and Guangzhou for research. At this time, I received a notice from a radio program department, and I officially entered the journalism industry. After I entered the news industry, I found that most journalists did not have their own understanding of pyramid schemes like ordinary people, but only understood them according to the above propaganda. I asked the news department above why it cracked down on pyramid schemes so hard. Is there any other reason besides carrying out propaganda tasks? I found in the theory of pyramid selling that pyramid selling was doomed to be unpopular with the media from birth. Now the media attaches great importance to advertising fees, which has almost become the only extra income for some media (to be honest, I was also asked to complete a number of advertising tasks when I was a host, which simply affected my work. There is a special advertising department, but the reality is that all staff have to pull advertisements. ) MLM is to save advertising expenses. I am very dissatisfied with relying on word of mouth to fight against advertising media. The endless media reports on the negative effects of pyramid schemes are undoubtedly one of the reasons for the demise of pyramid schemes. The deeper reason comes from pyramid selling itself, not to mention the "money-circling movement" of many companies under the banner of pyramid selling. Let's look at the performance of legitimate companies. First of all, due to management loopholes, the price of MLM products has remained high. Although some pyramid schemes have lowered their prices with the intention of occupying the market through price wars, it is a pity. The price is high and it is very popular. In terms of price, many investors can't bear the pressure, and the immature investment mentality is easy to get excited. Because MLM personnel have dual identities, when the investment mentality is distorted, the consumption mentality cannot be normal, so the number of complaints is increasing. These are still not the main reasons why the government is determined to completely ban pyramid schemes. At that time, the political climate of the mainland had changed. The government is facing the bottleneck of political power construction, and many forces in the ruling and opposition parties are rising. The central government urgently needs to implement a series of tough strategies to strengthen centralization. An incredible cultural concept suddenly appeared in MLM companies. "The change of ideas can change a person's life." Napoleon's famous words dominated several. Almost all MLM elites' disguised pyramid schemes (that is, "mouse clubs") are illegal, because they cannot create social wealth, and they do not make money by selling products or services. Even if the products are sold, their prices are far higher than the market price and tax evasion, and the entry fee is relatively high, ranging from several thousand yuan, which is enough to bankrupt some people in underdeveloped areas. Therefore, this society is extremely harmful and must be resolutely cracked down. China didn't refuse pyramid selling, but restricted pyramid selling, because people in China are too simple to sell pyramid selling, so they can't be exhibited in China, which has a lot to do with China culture. The public likes to follow the fashion and blindly follow the trend. There are problems with the propagandists and propagandists of pyramid schemes. The propagandist gave up the real benefits of pyramid schemes, exaggerated the benefits unilaterally, and was misled by pyramid schemes. He did not consider that not everyone could do pyramid schemes well, and he forgot his own quality when his mind was hot. There is nothing wrong with pyramid selling itself. The fault lies with the person who executes it. In China, those who recommend people to take pyramid schemes say that some people have become rich, but they never talk about risks and difficulties. In this way, once someone fails, it will immediately create an impression that pyramid schemes are unrealistic. If there are too many people, the country will ban them. In addition, China is an individual society, and many things are done by human feelings. Many people start pyramid schemes from people around them, and once there is a problem, it is easy to have a chain reaction. All these have led to the failure of MLM teaching to blossom and bear fruit in China.