Circular of the State Council on the Prohibition of Multi-Level Marketing Activities
Circular of the State Council on the Prohibition of Multi-Level Marketing Activities
Circular of the State Council on the Prohibition of Multi-Level Marketing Activities
Guo Fa[1998] No.10
April 18, 1998
The Government of all provinces, autonomous regions, municipalities directly under the Central Government; the ministeries and commissions of the State Council, all the institutions directly under the State Council,
The State Council has decided to ban the operational activities of pyramid sales to protect the legitimate rights and interests of consumers, promote fair competition and maintain economic order of markets and social stability. The relevant questions are hereby notified as follows:
I.Pyramid sales operation which is not in line with the state of the nation of China at the present stage has resulted in serious damage. Pyramid selling as a mode of operation, due to its characteristics of organizational closeness, concealed nature in transactions and the scattered nature of sales persons, in addition, the level of market growth in China at present is still low, the means of control is comparatively backward, consumption mentality of the masses has yet to mature, lawless elements have taken advantage of pyramid sales to conduct such activities as spreading heretical beliefs, ganging up, superstition and hooliganism which seriously deviate from the requirements of building of spiritual civilization and affect social stability in China; taking advantage of pyramid selling to admit cadres of organs of the Party and government, active-duty service personnel and students in full-time schools to participate in business has seriously disrupted the normal order in work and teaching; and taking advantage of pyramid selling to indulge in price fraud and extortion of money and property, promotion of the sales of imitated, fake and inferior quality products and smuggled products to gain exorbitant profits and evade taxes has seriously harmed the interests of consumers and interfered with the normal economic order.
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