How To Solve The Problem Of "Fake And Shoddy" In The Direct Selling Health Care Products Industry?

In 1990, Guangzhou Avon Co., Ltd., a Sino US joint venture, was established, becoming the first enterprise in China to carry out direct sales. Up to now, the direct selling business model has entered the Chinese market for 31 years, and occupies a place in China's market economy system.

In China's health care products industry, direct selling is an important business model. According to the data of prospective industry research institute, the top 5 health care products enterprises in China will still be dominated by direct selling enterprises in 2020. However, with the market scale of direct selling health care products expanding year by year, some enterprises blindly pursue performance, and frequently break the news of false products, exaggerated publicity and even illegal pyramid selling. The "Quanjian event" at the end of 2018 made the direct health care products industry drop to the bottom overnight, causing consumers to question China's health care product market and direct marketing business model.

In the era of national consumption upgrading, how should consumers choose direct selling health care products? What is the future development direction of direct health care products industry? On March 15, the special activity of "3.15 online industry dialogue and direct selling of health products" was held by 21st century economic report and 21st new health research institute. Zhu guohan, consultant of Guangdong direct marketing association and full-time deputy director of original Da Chuan Office of Guangdong Provincial Bureau of industry and commerce, Liu Tianpeng, chief scientist of China food safety and food nutrition and safety professional committee of China Health Association, and lawyer affairs of Guangdong Huanyu JINGMAO Ma Pingchuan, the lawyer of the Institute, respectively discussed the standardization and high quality development of the direct selling health care products industry from the perspective of direct selling industry, nutrition and law.

There are many marketing routines for health products

On December 25, 2018, Dr. clove published an article entitled "ten billion healthcare Empire Quanjian and its Chinese families under its shadow", pointing out that Quanjian group, which mainly sells health care products, is suspected of illegal pyramid selling and exaggerated publicity, thus delaying cancer patients' treatment. After more than a year's investigation, on January 8, 2020, 12 people including Quanjian Natural Medicine Technology Development Co., Ltd. and the defendant Shu Yuhui were convicted of organizing and leading pyramid selling activities.

In the dialogue, lawyer Ma Pingchuan combined his experience in the case of health care products to reveal the routine of illegal marketing of health products. For example, a criminal suspect wholesales ordinary health care products with a unit price of less than 10 yuan, which are packaged as products that prolong life or have special curative effects on various diseases, are sold to more than ten provinces and cities in China at a unit price of 5000-6000 yuan. The case involved a large number of people, a wide range of regions, the price difference between the import and export of health care products was very large, which caused a very bad impact on the society.

Combined with the cases, it is not difficult to see that the criticism of public opinion on direct selling health care products mostly focuses on the false propaganda of direct selling enterprises to exaggerate the functions of products. As a result, some consumers, especially the elderly groups, mistakenly believe in the enterprise's words and spend a large amount of money to buy health care products, which may suffer property loss or even life safety.

Why do these scripts work? Why do the elderly fall into the marketing routine of health products? Ma Pingchuan, a lawyer, said that this phenomenon is largely due to the fact that health products themselves rely on consumers' psychology of fear of aging and death. On the one hand, with the growth of age, the physical function of the elderly degenerates, which is an important consumer group of health products. On the other hand, the old people's knowledge update is relatively slow and their vigilance to marketing routines is weaker. "Old people have a certain amount of savings, and they have a certain spending power, so they are often targeted by criminals." Ma Pingchuan said.

In his view, the core of the problem lies in whether the law is legal or not, and whether the legitimate rights and interests of the elderly group have been violated. Lawyer Ma further pointed out that in order to prevent the fraud of direct selling health care products and safeguard their legitimate rights and interests, consumers should first clarify the concepts of "health care products" and "direct sales" before purchasing products, so as to avoid falling into the trap of illegal operation.

Health food is called "health food" in the legal definition. It is a kind of food in the popular sense. It is regulated by the food safety management law. It is only applicable to specific groups of people and does not take the treatment of diseases as the premise. However, in the current consumption environment of health care products in China, most consumers have the cognitive misunderstanding that the effect of health care products is too high, which gives illegal businesses an opportunity to take advantage of.

Liu Tianpeng pointed out that, on the one hand, some consumers expect health products to have instant effects like drugs, but the value of health products is to regulate human body functions, and the process of action is relatively slow. "Generally, it takes four months to get effective.". On the other hand, health products can only repair and regulate specific health damage, and there is no health food that can replace drugs and "cure all diseases".

Zhu guohan believes that direct selling is a kind of legal sales behavior different from illegal pyramid selling. It is a flat sales mode of "manufacturer direct seller consumer". It saves agents, physical stores and other intermediate links and greatly reduces operating costs. Most of these funds are used for product research and development, subsidizing production costs and reducing product market prices. Therefore, most of the regular and legal direct selling products are Wumei It's cheap.

It should be noted that enterprises can only carry out legal direct marketing activities after obtaining the direct marketing license. At present, there are 90 enterprises with direct marketing qualification announced by the Ministry of Commerce, of which 83 are engaged in the production and sales of health food. "The so-called factory direct selling of some enterprises without direct marketing license is not direct marketing in the legal sense." Ma Pingchuan said so.

How to consume health products safely?

How to choose legal, safe and applicable health products for consumers? During the dialogue, the three guests shared their views and suggestions from the perspectives of law, direct selling enterprises and nutrition.

From the legal point of view, Ma Pingchuan pointed out that purchasing legal health care products from regular channels is the top priority, and enterprise qualification and product packaging identification are important screening basis. Before purchasing direct selling health care products, it is necessary to confirm whether the business enterprise holds the direct marketing license issued by the Ministry of Commerce, so as to ensure that the enterprise has the legal qualification for direct marketing. In terms of product packaging, the packaging of legal health products has the mark of "blue health food" (commonly known as "blue hat"), and its approval number of health food (i.e. national food and Drug Administration) can also be inquired on the official website of the State Food and drug administration.

For the direct selling enterprises and industries, Zhu guohan stressed that they should look from the industrial chain and product publicity. He said that direct selling companies, which generally aim to sell their products, usually have an industrial chain including production, sales, service and consumption, as well as a sound return and exchange system to protect consumers' after-sales rights and interests.

In addition, according to China's relevant regulations, the publicity of direct selling health care products enterprises should not exceed the functional scope of their health food registration certificate and Filing Certificate. Health food can only be publicized within the scope allowed by the special functional catalog of health products. Consumers can query the product record information in the state food and drug administration, which is consistent with the product functions publicized by the enterprise Comparison.

Finally, from the perspective of nutrition, Liu Tianpeng admitted that it is really difficult for ordinary people to choose reliable and applicable health care products due to the lack of relevant professional knowledge. However, he believes that the technical content of products can be judged by the R & D team and quality assurance of enterprises.

In his opinion, the R & D team determines the ceiling of product quality. If an enterprise has a R & D team with excellent professional quality, the technical content reflected in the product will be higher. Quality assurance is the guarantee of production capacity and quality, which determines the lower limit of product quality. "Generally, enterprises with independent product lines have better product quality protection than OEM enterprises." Liu Tianpeng said.

In addition, product price is also an important measure. The ingredients of general health care products are not rare, and the prices are mostly in the tens to hundreds. Once the unit price of health care products is tens of thousands or tens of thousands, then most of its costs are used for marketing. We need to pay attention to the possibility of false publicity and fake and shoddy products.

If you have doubts about the quality and safety of the health food you have purchased, or if you find that there are illegal acts such as false publicity, you can call 12315 to ask the market supervision and management department to intervene in the protection of rights; once there are suspected of fraud, illegal pyramid selling and other behaviors, you need to dial 110 in time to report the case, "it is not only the protection of your legitimate rights and interests, but also the protection of other elderly friends, to avoid this It is a kind of infringement by lawless elements. " Mr Ma said.

Digital transformation accelerates

"The reason why health care products enterprises widely adopt the direct marketing mode is that the elderly group, as the main consumption force in the domestic health care market, lacks knowledge of health care products and needs one-to-one service from marketing personnel. The flat direct sales channels provide financial support for terminal services." Through the analysis of the development history of direct selling, Zhu guohan divides the development of direct selling business model in China into four stages: starting, rapid development, outbreak and transformation.

According to his introduction, from 1990 to 1998, direct selling was in its infancy. Due to imperfect regulatory means and immature consumer psychology, illegal direct selling was rampant. From 1998 to 2005, direct selling has entered a stage of rapid development. The promulgation of regulations on Prohibition of pyramid selling and regulations on management of direct selling standardizes the market order, and at the same time, it promotes the industry reshuffle and ushers in a leap forward development.

From 2006 to 2018, the direct selling industry has entered an explosive period. Driven by the trend of social aging and consumption upgrading, consumers' demand for large health products with high service added value has increased rapidly. The scale of direct selling industry has increased from 59.3 billion yuan in 2010 to 220.784 billion yuan in 2015.

However, the outbreak of the "Quan Jian event" in December 2018 directly triggered the unprecedented trust crisis of consumers in the health care products and direct selling industry. The "100 day action" launched for the "health care" market further strengthened the regulatory pressure on the direct marketing market. As the industry entered the transition period, it was urgent to rebuild consumer trust and seek new growth points.

At this stage, the digital marketing transformation strategy has become the first choice of the direct selling industry. Direct selling enterprises have begun to lay out the Internet channels and combine direct selling with new retail and e-commerce. According to Zhu guohan, "almost a third of companies, especially large direct selling companies, have mentioned digital transformation and upgrading."

In addition to further reducing the customer acquisition and operating costs of direct selling enterprises, Zhu guohan believes that social e-commerce is highly consistent with the flat sales mode of "manufacturer dealer consumer" of direct selling, and will become the key direction for the direct marketing industry to expand market space in the future. "Social e-commerce is a kind of private marketing based on interpersonal relationship and emotional communication. It has the characteristics of personal experience, circle sharing and acquaintance distribution, which is very similar to direct marketing in essence, and provides convenience for the deep integration of direct selling enterprises and new social retailing." He said.

In addition to the internal transformation of direct selling enterprises, the external market supervision system is also increasing efforts to eliminate the industry chaos in the direct selling health care products market.

After the "Quan Jian incident", on January 8, 2019, 13 departments, including the State Administration of market supervision and administration, jointly deployed the "100 day action" to rectify the disorder in the "health care" market, strictly investigated the illegal sales of health care products, and suspended the approval of direct selling enterprises. As of March 1, 2019, the State Administration of market supervision has filed 4865 cases, with a case value of 5.17 billion yuan.

Although there are some abnormal phenomena in the development of direct selling industry, such as false products, exaggerated propaganda and illegal pyramid selling, Zhu guohan believes that enterprises with problems in any industry may appear. Only by strengthening supervision and continuous supervision can the healthy and stable development of the industry be maintained. "As long as the quality of the products sold is excellent, the after-sales service is perfect and the consumers are satisfied, there is no need to close down the direct selling industry." He said.

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