Pyramids on Pyramids
The top ten pyramid scheme companies, such as Amway Korea, are far ahead of other multi-level marketing companies in terms of sales revenue and support allowances, accounting for 79.1 percent and 80.9 percent respectively out of total 106 public member companies in the sector.
According to the “information disclosure of pyramid sales and visiting sales” of the Fair Trade Commission, the total sales revenue of 106 targeted companies last year increased 19.9 percent to 3.9491 trillion won (US$3.9027 billion) compared to the previous year. The size of the pyramid scheme market has constantly increased for seven years since 2007, which has been led by the top seven companies.
The sales revenue of the top ten companies (3.1234 trillion won) accounts for 79.1 percent of the total, which is quite similar to the previous year’s 79.8 percent. Twenty-eight new companies recorded sales revenues of 68.6 billion won (US$67.7 million), only 1.7 percent of the total.
The total support allowance of 106 companies last year increased 21.1 percent to 1.2926 trillion won (US$1.2774 billion) compared to the previous year. The support allowance ratio to sales revenue (3.9 trillion won, US$3.8 billion) increased 2.6 percentage points to 32.7 percent compared to the previous year.
An official at the Fair Trade Commission pointed out, “Commissions were still skewed towards top salespersons. The top 1 percent [12,523 people] receive 56.62 million won [US$55,916] annually, but the other 99 percent [1,240,000 people] receive 469,000 won [US$463.48], not even 1/100th of the top 1 percent.” The support allowances that the top 1 percent received for a year were 709 billion won (US$700 million), greater than the total amount the other 99 percent of salespersons (1,240,000 people) received, only 583.6 billion won (US$576.3 million).
Support allowances of the top ten companies were 1.0463 trillion won (US$1.033 billion), 80.9 percent of the total (1.2926 trillion won, US1.2774 billion). Support allowances of most of the top ten multi-level marketing companies increased, except Herbalife Korea and NR Communications. Only 971,000 salespersons out of the total (4,380,000) in the top ten companies received support allowances, and the average amount for each person was 1,077,745 won (US$1,064.15).
The number of pyramid salespersons was 5,724,000 at the end of last year, 1,024,000 (21.8 percent) larger compared to the previous year. 860,000 salespersons were newly hired by the top ten companies. Atomy (636,000), Nu Skin Korea (152,000), and Unicity Korea (59,000) showed increases in their sales personnel. The number of total salespersons in the top ten companies was 4,380,000, 76.6 percent of the total registered salespersons.