Want to enter in Thai Market with a Multi Level Marketing Project? Let us assist you in the process!
Every activity linked to Direct Sales, Direct Marketing and Multi Level Marketing (MLM) in Thailand is strictly regulated by DSA and OCPB. In order to start a new Multi Level Marketing Project you will need to act in three steps: 1) Register your Direct Selling Company; 2) Product Registration in Thai FDA; 3) Obtain a Direct Sales License. A summary of each step is in below section.
In Thailand there are actually 35 Multi Level Marketing Companies; Cosmetics and Personal Care Products weight 27% of the market, wellness products are 39% of the total. Great part of wellness is covered by Dietary Supplements, that are normally the most problematic products for Multi Level Marketing Companies. Contact us if you are experiencing a “desperate case” of repeated rejection by Thai FDA. We’re here to support you.
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Multi Level Marketing License can be obtained directly by opening a Thai Company or Through a License Holding Program
MULTI LEVEL MARKETING LICENSE IN THAILAND
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General Guidelines on Multi Level Marketing License in Thailand
- DBD for Company formation
- Revenue Department for VAT registration
- Thai FDA for healthcare, Dietary Supplements, Cosmetics
- TISI for electronic appliances, housejold products
- Office of Consumer Protection Board for the approval of your operations
- Custom for product import
- Department of Labour Protection and Welfare for your sales network administration
What is the Multi Level Marketing License
These activities generally refers to the the selling or marketing of goods and services by independent sales agent directly to consumers at their home or workplace. In Thailand, the Direct Sales and Marketing Act of B.E. 2545 (2002) defines the terms as follows:
- “Direct sales” refers to the marketing of goods or services made directly to the consumer at his or her home or workplace or any other place that is not an ordinary place of business. The business can be organized through direct sales representative or uni-level or multi-level independent distributors.
- “Direct marketing” refers to the marketing of goods or services communicating directly to the consumer at a distance and expecting such consumer to respond and purchase the goods or services from the direct marketing operator.
According to the DBD, direct sales is considered Retail Sale under Section (14) of List Three of the Foreign Business Act as well as a “service” business under Section (21) of List Three of the Act, both restricted to foreigners.
Direct Marketing is considered a service business under Section (21) of List Three. Foreign owneed companies would have to apply for permission from the Director-General of the Department of Business Development. According to the Section (14), the restriction regarding retail businesses only apply to those with a minimum capital less than 100 million baht. As consequence, foreigners who shall actually use a minimum capital of at least 100 million baht to operate their business can engage in direct sales without applying for permission as described above.
Most business activities in Thailand require registrations and/or licenses; the MLM business is no exception. Multi Level Marketing Companies are obligated to register with the Consumer Protection Board through the direct-sales section of the Office of the Consumer Protection Board (OCPB).
The Office of the Consumer Protection Board (OCPB)
OCPB is the authority responsible for registration; an application by a MLM Company will undergo a thorough examination aimed at protecting consumers’ rights.
If OCPB considers an application as not compliant with the law, it will ask the applicant to amend it within a reasonable period of time. Upon resubmission of the revised application, the registrar will process the registration within 30 days if it meets all criteria.
DSA does not require that an applicant be a company formed in Thailand,but this is in practice generally preferred. DSA will also expect a company to have at least one Thai director, and if all directors are foreigners, at least one must hold a valid work permit.
The most important aspect that will be considered is the compensation or remuneration plan for distributors or representatives. The direct-sales section will deeply examine whether the plan:
- Not require an independent distributor to purchase goods;
- Not encourage an independent distributor to purchase goods in unreasonably large amounts; and
- Clearly demonstrate remuneration payment calculations.
Calculation intervals and remuneration payments should not be less than 14 days, and an independent distributor can return any purchased products to the company within 15 days.
Multi Level Marketing Advertisement and Promotion
Advertisement is subject to control by the advertisement committee, and the direct-sales section may order the MLM company to obtain a written opinion from the advertisement committee.
Also product catalogue shall be reviewed in detail, and in case it contains any medical claims, MLM company must provide scientific test results issued by a reliable organization in support of such claims. Advertisement committee’s placeat is not free of charge, and it will delay the registration process if not properly managed.
After the registration is finished, any changes made to the documents must be submitted to the OCPB. Although the registration does not need to be renewed, the company must report its business progress to the OCPB twice in every year, in January and July.
Law and Regulation for Multilevel Marketing Companies in Thailand
- Foreign Business Act, B.E. 2542 (1999)
- Direct Selling and Direct Marketing Act, B.E. 2545 (2002)
- Consumer Protection Act, B.E. 2522 (1979)
- Cosmetic Act, B.E. 2535 (1992)
- The Food Act, B.E. 2522 (1979)
- Industrial Product Standards Act, B.E. 2548 (2005)
- Labour Protection Act, B.E. 2541 (1998)