Rational Thinking on Multi-level Marketing in China

Multi-level marketing is derived from direct marketing, which has three versions in Chinese market: "direct marketing (Zhi Xiao)," "chain marketing (Lian Xiao)," and "Pyramid scheme marketing (Chuan Xiao)." They have been in existence for quite a long time and are treated by Chinese government with three distinct attitudes: highly encouraging, low-key encouraging and highly banned. The three policy trends are respectively reflected in "published-document encouragement, the guidelines from the statements of political leaders, and law-regulation commitment," featured by the Chinese characteristic marketing modes, ensuring healthy and orderly operation along the orbit of the legal system through central governmental macro control and local governmental strict management. This paper will untangle the concepts of three kinds of marketing modes from the definition, marketing history, strategy and suggestions put forward on how to keep up with international competition among Chinese national enterprises, under the commitment to performing the WTO articles, before gradually opening capital market.