17 in 100 Adults Involved in Multi-Level Marketing

Korea Times/November 25, 2003
By Kim Sung-jin

The combined sales of 82 local multi-level marketing companies amounted to 3.81 trillion won with 5.93 million people registered as sales staff of those firms.

This means that 17 out of every 100 adults in the country are involved in the multi-level marketing business.

According to a survey by the Fair Trade Commission (FTC), major multi-level marketing firms reaped a combined 3.81 trillion won in sales in 2002.

Multi-level marketing firms, or pyramid companies, refer to companies that adopt a sales system under which the salesperson receives a commission on his or her own sales and a smaller commission on the sales from each person he or she recruits to become a salesperson.

The FTC said 16.95 percent of the 35 million South Koreans aged 20 years and older are involved in multi-level marketing. It added that about one-third or 2.13 million of the salespeople are full-time employees.

It also estimates that the 82 firms spent a total of 1.24 trillion won on their salespeople last year to encourage marketing activities. This means that in 2002 a salesperson working for a multi-level marketing firm received an average of 584,000 won in bonus payments.

However, the anti-trust agency estimated that the actual number of salespeople working for multi-level marketing firms is much larger as it only surveyed companies that are operating legally.

Amway Korea, South Korea's largest pyramid company affiliated with Amway of the United States, accounted for 30.8 percent of the total sales and 20 percent of the sales staff. About 1.18 million people were working for Amway Korea, which earned 1.17 trillion won sales last year.

Dynasty International, which employees 1.24 million salespeople, chalked up the second largest sales at 573 billion won.

Altwell ranked third with sales reaching 362 billion won and was trailed by Hiliving (259 billion won), Korea Hanbaek International (231.8 billion won), JUNetwork (216 billion won), World Total License (131 billion won), Herbal Life (110 billion won), Sunrider Korea (97 billion won) and NSE Korea (88 billion won).

The FTC said it would disclose multi-level marketing company information annually, including sales and bonuses provided to salespeople. It said it will also disclose credibility rankings of multi-level marketing firms and their sales growth rates from next year.