"Hello, I'm a nutritional meal, scan the code to follow it." On a subway, you may encounter several people hunched, holding their phones, and chatting in front of you. They are selling the same product - Herbalife meal replacement shake.
Herbaura was founded in 1980 and is headquartered in Los Angeles, USA. It was listed on the New York Stock Exchange in 2004. At the end of 2001, Herbalife products began to be sold in the Chinese market. In 2007, after Li Yanliang took office as president, he quickly obtained the license for Herbalife to sell directly in China.
Picture source: Ministry of Commerce Direct Sales Industry Management Website
According to data from the Ministry of Commerce Direct Sales Industry Management Website, Herbalife currently has 28 branches, 611 service outlets, 16 direct sales products category 1, and 149 direct sales trainers.
Eyewife said: From the "Dream of Getting Rich" to the direct salesmen of owed 400,000
Herbaura, some have realized the myth of getting rich, while others have lost everything because of this. Li Li told the "business figure" that she spent six years to become a senior intermediate service provider, but she was in debt of more than 400,000 yuan. The following is an excerpt from her experience:
I started working in Herbalife ten years ago. I was less than 20 years old at the time and worked as an administrator in the company. My monthly salary was 3,000 or 4,000 yuan. I was moved when I saw my classmates working in Herbalife earn more than 10,000 yuan per month.
Seeing that I had the intention, my classmates invited me to attend the meeting. Everyone was very active and excited at the meeting and shouted slogans. There was a person who used to be the front desk cashier of a hotel, but now he had a villa and a Bentley, and opened one or two hundred clubs. After I participated, I felt that so many people have changed through this platform, so can I do it.
job is to attract customers, either let them drink milkshakes and lose weight, or develop him into his own partner. Our company has no basic salary, so the customer orders the products and I will take the money to order the company's official website, and the company will give me the rebate the next month. At first, I only had two or three thousand salary per month, and sometimes I didn’t even have it. In order to make customers trust more, they also have to join the club, with a monthly affiliation fee of more than a thousand to more than one thousand.
actually has no big problem in sales, but there are many meetings and the density is very high. The meetings are held for 4-5 days a week, and it will be held for half a day.
Meetings are just a stimulant blood, and you must work hard. As long as you endure hardship for three or five years, you will definitely make a lot of money in the future. I have been quite poor since I did this, but after the meeting, I still feel that I will be very rich in the future and full of confidence.
is also very expensive to hold a meeting, and you have to pay all the fees for transportation, accommodation, tickets, etc. The company often goes to five-star hotels for meetings and goes to Macau once a year. If you have a little level, you cannot book cheap hotels. You must book a three or four thousand yuan a night, so that your partner will feel that you have made money and will do it with you. You also need to buy tickets for meetings, ranging from dozens to 500 yuan.
I have to spend at least 2,000 yuan a month at the meeting, and some people can spend 50,000 or 60,000 a year.
My superior told me that you must assess the level and get to a higher rank. After reaching the intermediate level, your monthly salary will be 30,000 to 50,000 yuan. She kept instilling this kind of thoughts and concepts in me, so I especially wanted to take this level. After entering the industry for three years, I reached the intermediate level. The requirement was that my sales of 60,000 for three consecutive months was first to reach 60,000, and the team's sales of 250,000 for three consecutive months were second.
assessment rank, you must form a team, and the performance must be completed by yourself and the team. I spent 60,000 yuan to get goods, and the salary I can get is 60,000 × 40% + 250,000 × 7%, totaling 41,500 yuan.
Our salary model is: if you sell your own products, if you sell them for 4,000 yuan, you can get a 10% service fee, if you sell them for 13,000 yuan, you can get a 15% increase, and if you sell them for more than 30,000 yuan, it is a fixed 40%. By forming a team, ordinary service providers can get a 5% service fee for the lower team, intermediate level 7%, advanced level 9%, and special level 11%. We call commission service fees, which seems more legal.
But I have to achieve a certain level of sales before I can get a commission from the lower team. For example, I am an intermediate level and must achieve 60,000 to get 7% of the lower team. If the lower team develops a lower team, I can get another 2%. So many people will pay for the goods if they cannot complete their tasks.
The main way to lose money is to get goods to yourself and your superiors, and to package yourself very high-end so that you can attract partners to join the team.
The superior went to the assessment, and he would say that we had such a good relationship. Don’t you support me during the assessment? If you don’t support your boss, you won’t be able to make trouble next time. He will exclude you in various ways and keep saying that he will not give you any face.
My superior also told me that you must buy a car, and others will only do it with you when they see you make money. I bought a BMW myself, with a down payment of more than 100,000 yuan and a loan of 200,000 yuan. After the
assessment and promotion, if the performance does not meet the standards, it will return to the next level. I didn't know this before I got into the intermediate level, and I won't go to it if I know it. After getting to the intermediate level, I thought again that if I didn’t do it now, I would lose all the money I invested before and would not be willing to give up halfway.
For the second intermediate assessment, I invested another 200,000 yuan. I can't tell how much I can earn every month. For example, I made 100,000 yuan this month and got 40,000 yuan the next month, so I invested the 40,000 yuan again. Others think my monthly salary is quite high, but in fact, after I get the salary, I immediately go to get goods. Apart from the expenses for meetings, I can only say that I can save my life at most.
In this way, I have a total debt of more than 400,000 yuan. Of the more than 400,000 liabilities, more than 200,000 products and more than 200,000 car loans. Some borrow from friends around me, some borrow from credit cards, and some borrow from micro loans.
Many Herbalife people borrow micro loans, and the withdrawal is because the money cannot support it. I joined a Herbalife rights protection group, with more than 100 people, and each of them lost at least 200,000 to 300,000 yuan. There was a big sister who sold vegetables and sold all the car houses to get goods because of the assessment level. In the end, she suppressed a lot of goods and all of them expired. There was also a young man who owed more than 700,000 yuan. I think it would be difficult for him to make a comeback in his life.
At the most, I have to pay 20,000 yuan a month. The bank calls to collect debts every day, and eating has become a problem. I often eat instant noodles. At that time, I felt that I still had no dreams or not, and I couldn't survive, so I completely woke up.
After I exited, I processed the goods I had stored at a low price on Xianyu. It took more than half a year to sell them. I changed my job and paid my salary. I am still paying it back slowly now, and I am under a lot of pressure.
Looking back now, I regret it. I want more people to see my experience, and I don’t want people to be heavily in debt at a young age like me. I hope that those who are still losing money can stop the losses in time. I can help each one calculate the other.
has been involved in many marketing scams and has been controversial
As early as 2013, Herbalife was exposed by many media, with a total of more than 100,000 yuan in consumers being defrauded.
In January 2013, 42-year-old Harbin Ms. Minchang was admitted to the First Hospital of Harbin Medical University before the New Year due to hypoproteinemia, malnutrition, ion disorders, and rapid sinus heart rate caused by weight loss. Previously, in order to pursue a perfect figure, she spent 47,014 yuan at one time to purchase more than ten Herbalife weight loss products and ate these products strictly according to Herbalife nutritionist's weight loss recipes. She believes Herbalife weight loss products have caused her condition.
According to Ms. Chang, after taking it for one month, she found that her skin began to turn darker, but Herbalife nutritionist said that she was detoxifying and she had to continue taking it to be effective. After taking it for another half a month, she began to experience symptoms such as fatigue, physical weakness, and heart thrust. She went to the Harbin Boiler Factory Hospital for routine blood and liver function tests. The report showed that the potassium, sodium, calcium, magnesium, protein and other indicators in her body were all low, while the bilirubin and aminotransferase were all high.
Ms. Chang's husband came to Herbalife Company to ask for an explanation for his wife, but the other party asked "to take out the doctor's diagnosis, and the diagnosis must state that it was caused by eating Herbalife weight loss products." Mr. Li provided them with examination reports and diagnosis from three hospitals, but the reply he received was "Go back and wait for news."
At the same time, Ms. Chen from Ezhou complained that the health product "Herbaura" exaggerated, which was a big mistake. Ms. Chen is a farmer in Ezhou. She just gave birth to her baby in August last year. After giving birth, her belly became very loose and there were many stretch marks on it. She told reporters that during the National Day holiday last year, she was fooled by a middle-aged woman and purchased Herbalife products for more than 7,000 yuan.
Middle-aged woman told her that Herbalife series products are international modern high-tech products, with very strong quality and can improve immunity. Not only can repair damaged skin, but can cure diseases if you are sick, and prevent diseases without diseases. As long as the mother takes this product for half a year, her skin can be firm as before. She also said that it can also improve sub-health status and make people energetic every day...
Ms. Chen, who is anxious after giving birth, believed the middle-aged woman's words. For 6 months, she insisted on taking the protein powder and milkshake drinks from "Herbalife" every day, but found that her belly was still loose and stretch marks were firmly attached to her skin, without any improvement.
According to the Investors News, Ms. Qiu's family in Shanghai wanted to make some money after retirement. Through online searches, she learned that she could work part-time at home to do direct sales, so she called to ask. The other party said that the government supports direct sales and solves employment, and even introverts can do a good job.
After joining, he kept asking Ms. Qiu’s family to recommend newcomers to join, and if they couldn’t attract anyone, they forced them to buy products. Ms. Qiu's family invested 50,000 yuan to buy products and spent 10,000 yuan to build a website. After working for one year, she did not get any income.
Ms. Qiu's family didn't sell the Herbalife products they purchased online until they were finally sold. She returned the goods to online, but they disappeared shortly after they went online, and all investments were wasted.
In addition, according to Nanchang Li Huan (pseudonym), in 2012, her boyfriend was encouraged to quit his three-year job despite his family's opposition and joined Herbalife's direct sales team. As a result, Li Huan's boyfriend spent more than 20,000 yuan to buy products and attend classes, and the products are still piled up at home and cannot be sold.
"At that time, he said that it is good to be a dealer of 50,000 yuan, how can you make more money?" Li Huan said, "Buying a product of 48,000 yuan at a time can become a dealer of Herbalife. Two people without strength can also package it together as a dealer, but the dealer must sell 24,000 yuan in performance for three consecutive months to maintain this position, otherwise, you will not get a high commission."
It is understood that Herbalife will calculate all performance based on the PV value, and 1 PV is equal to RMB 12. If you complete RMB 1,200 to RMB 48,000 per month, that is, 100PV to 4,000PV and above, you can get a sales commission of 15% to 26%. However, in order to ensure that such a level requires a certain monthly sales, otherwise you will not get a high commission.
Mr. Yang from Hangzhou also had the same experience. He dreamed of joining Herbalife for two or three years and had a house and a car, but encountered a cold and cruel reality. Mr. Yang once participated in Herbalife's direct sales training activities and formed a team to operate Herbalife products in Hangzhou. He told reporters that he and his team got up before seven o'clock every morning to deliver leaflets, attract customers, hold meetings, and listen to classes, but they have to "digest" all the products that cannot be sold.
According to Mr. Yang, before you start to attend classes, you have to pay a 100 yuan information fee. After that, they will be taken to various regions for meetings. All travel expenses, catering expenses, and accommodation expenses must be paid by themselves. If they develop to the offline line, they will take the offline line to attend classes. They will pay all the fees before purchasing the goods.
After several months, Mr. Yang's investment of 8,000 yuan not only lost all his money, but also owed several "commissions" by the company. Mr. Yang expressed his heartache.
's performance has been declining continuously, direct sales industry experienced a "cold winter"
Since entering China, Herbalife has always had outstanding performance. By 2016, Herbalife's sales in China exceeded 6 billion.
However, its performance in the past two years has seen continuous declines. The third quarter 2019 financial report shows that in 2019, Herbalife's sales in China continued to decline, falling again and again, and achieved sales of 1.5 billion yuan in Q3, a decrease of 21.7%. Not only that, Herbalife is also in a lot of trouble.
In November 2019, for intentional violation of the US Anti-Overseas Bribery Act, winning business through bribery, and evading regulatory scrutiny, the US Department of Justice filed a criminal lawsuit against Li Yanliang, former president of Herbalife China and senior vice president of the world, and Yang Hongwei, former director of the Department of External Affairs.
Prosecutors pointed out that from 2007 to 2017, Li Yanliang obtained a sales license through bribery and evaded regulatory scrutiny.Yang Hongwei reimbursed more than $25 million for employees by providing catering, entertainment activities, gifts, etc.
Chinese food industry analyst Zhu Danpeng said that the accusations in the United States are currently unilateral. The key is whether China recognizes the US ruling, and domestic regulatory authorities will definitely conduct relevant investigations. If it is determined that he has bribed and accepted bribes, there is a possibility that the direct sales license will be confiscated.
In addition, the SEC found that between 2012 and 2018, Herbalife falsely disclosed to investors that because China allows direct sales but prohibits multi-level marketing, Herbalife adopts different business compensation models in China. In fact, its business operations and payment service providers in China are similar to their global operations. In other words, Herbalife has disguised pyramid schemes in China and conceals them from investors, resulting in investment risks.
Looking at the domestic health care products industry, the direct sales model is usually adopted, but chaos such as disguised pyramid schemes, inflated prices, and false propaganda have frequently exploded. Previously, many news reports revealed that Herbalife violated the regulations on "multi-level direct sales". Some Chinese direct salesmen who participated in Herbalife direct sales accused Herbalife model of losing all their money and suspected of pyramid schemes.
In March 2018, Herbalife China was investigated and punished by the Industrial and Commercial Quality Supervision Bureau of Erqi District, Zhengzhou City, Henan Province for illegal direct sales. The amount of fines and confiscations reached 5.73 million yuan, setting the largest record of fines and confiscations in single cases.
is a coincidence. As the largest direct sales company in China, Infinitus has also been exposed to have suspected pyramid schemes such as "pulling people", "multi-layer reward system". In addition, Infinitus was once fined and confiscated for direct sales operations beyond the scope of direct sales products for false publicity and was fined 5907,283 yuan.
According to relevant regulations, direct sales are legal business activities, with "single-level" as the main feature. Pyramid schemes are illegal business activities, with the main characteristics of "pulling people", "entry fees", "multi-level" and "team remuneration".
Chapter 2 Article 7 of the "Regulations on Prohibition of Pyramid Selling" clearly stipulates that the organizer or operator requires the developed personnel to develop other personnel to join through the development of personnel, and calculate and pay remuneration for the developed personnel based on the number of personnel directly or indirectly rolling development, and make illegal benefits; the organizer or operator requires the developed personnel to develop other personnel to join through the development of personnel, forming an up-down relationship, and calculate and pay the up-line remuneration for the sales performance of the following lines, and make illegal benefits, all are pyramid schemes.
Since the Quanjian incident, the country has increased its supervision of direct sales companies for health care products. The State Administration for Market Regulation issued the "Announcement on Further Strengthening the Management of Telephone Marketing Behaviors of Health Food Production and Operation Enterprises", which clearly states that when health food operators conduct marketing and publicity of health food in the form of telephone, they should be true and legal, and should not make false or misleading publicity; they should not express or imply that health foods have the function of preventing or treating diseases.
Quanjian collapsed, Infinitus and Herbalife were deeply involved in pyramid schemes, and the performance of direct sales giants such as Avon , Ruxin, and Yousana have plummeted one after another. The direct sales industry is undoubtedly experiencing a "cold winter".
(At the request of the interviewee, the name is a pseudonym, and some experiences have been fuzzy)
Source: Comprehensive business figures, Zhongyuan News Network, China Economic Network, etc.
