shouldbe_onthe_mlmrush

You may have heard about it by now. The Lion City, as it is called, has for ages been the hub of international commerce in the Asia Pacific region. However, network marketing or multi-level marketing is perhaps the only type of legitimate business model that did not flourish in Singapore, until recently, that is. MLM has been banned in Singapore for 27 years until the year 2000, when MLM companies were once again allowed to operate in Singapore, albeit under strict controls.

An island country with a population of 4.24 million, Singapore has undeniable appeal to network marketers from all over the world due to its status as a recognized hub for international commerce. Most network marketers' sole reason to expand to Singapore is not to build a network among native Singaporeans themselves, but rather to find "traveling" prospects that will eventually bring the opportunity back to their respective countries, and build a network there.

Is Singapore a network marketing heaven? Most people seem to think so. In Singapore, the potential of expanding your business worldwide without actually traveling around the world yourself seems more of a reality than in its neighboring countries.

However, this is just one side of the story. There are pros and cons to trying to build your network marketing business in Singapore, and the following study will demystify several myths about the future of network marketing in this part of the world.

KEY INDICATORS OF DEMAND

Network marketing or MLM, at the most basic level, is actually just an alternative source of income, one that can be embraced by just about anyone with the vision and determination to do so. To identify the potential of network marketing, we first need to determine whether an alternative source of income is in high demand, and then we'll be able to see the big picture of the potential of growth for network marketing. Let the facts speak for themselves.

1) Employment levels

For three years (2001-2004), Singapore's retrenchment rate was about 12,000 a year, and its unemployment rate grew from a low of 1.8% in 1997 to a high of 4.7% in 2003. To make matters worse, the unemployment level of resident Singaporeans was significantly higher, at 5.3% in 2004.

Resident Unemployment Rate (%)
The statistics are rather alarming for a country that for years had one of the lowest unemployment levels in the South East Asia region. Although statistics show that the unemployment rate took a turn for the better in 2004, it is generally observable that the overall rate can be seen to increase or at least remain high for the next few years.

Since 2004, the Singaporean government has begun to realize the potential of network marketing as a contributing factor to national GDP growth, and the role models are aplenty. Neighboring countries like Malaysia, Indonesia and the Philippines have long since accepted network marketing as an alternative solution to rising unemployment rates.

According to statistics gathered by the World Federation of Direct Selling Associations (http://www.wfdsa.org/), there are over 250,000 people in Singapore in direct sales, churning up US$192 million worth of retail sales in 2002. In year 2003, sales were estimated to be US$300 million.

Although this reflects the growth of direct selling, which may or may not be driven by a network marketing compensation plan, in general the growth of direct selling is related to the growth of network marketing, as more network marketing companies venture here hastily and more Singaporeans come to realize the potential of this industry.

2) Minimum Wage

Singapore does not have a minimum wage policy, forcing the workforce, who faces stiff competition for promotions and job opportunities, to take on various part time jobs. Many work very long hours. The absence of a minimum wage policy also generally means that there are no guarantees to living a comfortable life here.

In a highly educated society such as the one in Singapore, the high rate of competition can be seen everywhere, from pre-school right up to tertiary education levels. When graduates enter the workforce, they are in constant fear of losing their jobs. This fear is further amplified when you reach the age of 40, where in today's economy you may be seen as less cost-effective, slower, and an overall liability to the management or employers. If there's such a thing as job security in Singapore, it's a mere illusion.

3) Money and Time

The average Singaporean income per year is approximately US$11,305. This could indicate that the average Singaporean may not really need more money. However, this is only one side of the coin. Singapore is also known to have one of the highest costs of living in Asia, and people generally spend more as their lifestyle changes. The mean earning power between the rich and the middle class also tends to be poles apart.

According to Sinapan Samydorai, President of Think Center (http://www.thinkcentre.org/), "Working long hours, Singapore workers have become mere "cogs" trapped in the survival struggle to maintain their livelihood. Women are generally paid less for the same job, and those born with physical or mental defects are shunned. Older workers are foremost rejected at job interviews. When economic growth fell, workers' Central Provident Fund (CPF) pay was cut. However, taxes go up in the form of GST. The poor are voiceless, hidden, unseen and unheard in this wealthy island state."

Even if money is not a factor, most Singaporeans would be attracted to the promise of freedom from a 9-to-5 job that network marketing offers.

NETWORK MARKETING GOVERNANCE IN SINGAPORE

The central body that regulates network marketing activities in Singapore is the Multi-level Marketing and Pyramid Selling (Prohibition) Act. The Ministry of Trade and Industry administers the Act.

Whenever people are in doubt, they always fall back to the regulations to check for legitimacy of the company and to get solid proof to what they're about to get to. For those who do actually check the guidelines issued by the Ministry of Trade and Industries, they may end up more doubtful than ever.

Here's the Ministry's vague definition of network marketing:

A Multi-Level Marketing or Pyramid Selling scheme will typically require participants to pay an upfront charge. In return, the participants are promised financial rewards for each additional participant recruited, as well as all new participants who are in turn brought in by their recruits - hence the pyramid-like structure.
Here is an excerpt from the guideline, stating the consequences to the participant of network marketing should they lose money in their business:

Under the Act, all persons who participate in multi-level marketing or pyramid selling would commit an offence. This is because the participants would have played an active but destructive role of attracting others into the scheme. We believe that this is the best way to deter the potential promoters of such schemes.

The ministry also gives the following guidelines for identifying illegal "schemes:"

When the promoter hype about how easy it is to earn money, people can get very rich in a very short time and that the way to earn money is by recruiting others to join the scheme;

The so-called product that you are supposed to sell is not something you would normally buy at its price;

Participants are required to invest money into the scheme, whether in the form of a joining fee, or buying inventory.
Anybody convinced of running an illegal MLM scheme can be imprisoned for five years and/or fined up to S$200,000. With such vague definitions and strict penalties in place, the Singaporean government is not really helping the network marketing revolution at all.

It's like a love and hate situation between the government and the network marketing industry. Although the government may feel the need to look at other sources of economic growth and employment, they are still far from endorsing network marketing to any level. As far as you should be concerned, the regulations are not in your favor here. The government is still in a "wait and see" position, and you'll do better by trying to conform to the regulations as much as possible.

ONLINE VS. OFFLINE PROGRAMS

The Internet has opened up a new world of possibilities for Singaporeans. Due to the nature of the Internet, online network marketing opportunities cannot be regulated by the government, and the infiltration of various online "scams" has also made the general public wary of such programs, even though there are some genuinely good opportunities for Singaporeans.

The attraction of Internet-based network marketing is the promise of an "automated" system, where the participants are not required to do any work. As an opportunity seeker in Singapore, you should be very cautious about believing such claims. After all, if your involvement and effort were not needed, why would they want you to join in the first place?

Network marketers that seek to venture into Singapore should also consider this fact, since high-tech opportunities that are online and "work at home" in nature has broader appeal among the highly educated Singaporeans, as compared to traditional network marketing, which is generally seen as less attractive.

THE PUBLIC'S STAND

The Singaporean public is generally wary of the influx of network marketing companies and network marketing products since 2004. As with any new markets, there tends to be lack of awareness and conviction among the public. Besides, the opinions in most forums and online discussion panels is that network marketing is about selling your soul to money, and pestering friends and family to buy ridiculously priced products, just to make yourself rich.

From my research on various online forums and informal interviews with network marketers in Singapore, there generally appears to be two major misconceptions about network marketing. The first is the confusion between MLM and pyramid schemes, where people are still not aware of the difference between illegal "pyramid" schemes and legitimate network marketing opportunities. The second is the confusion of MLM to direct selling, as most people in forums seem to think of network marketing as nothing more than a direct sales job.

Although there is general interest, the law of nature states that the bad news always gets around faster than any good ones. In this particular case, Singaporeans are reminded of stories in newspapers and other sources of doctors promoting MLM products and business opportunities to patients in their practice. This news alone created more uproar in Singapore than most other current events.

If you're promoting a network marketing business in Singapore, be prepared for references to this incident. A full paper is available here: http://www.sma.org.sg/sma_news/3609/president.pdf

CONCLUSION

Although network marketing may seem to be booming in Singapore, there are associated risks as well, and these remain the same as it would be in other countries. Some may question the longevity of a network marketing company in a country that has only 4 million people. Others may question the appeal of network marketing to a highly educated, highly paid society. Still some may be of the opinion that the gold is not in Singaporeans themselves, but rather the immigrant workers who happen to be there temporarily.

Whatever the argument may be, as a network marketer you should be able to understand that every opportunity comes with a challenge. The challenge, in this case, would be to fend off an eavesdropping, suspicious government and uneducated (when it comes to MLM) but curious citizenry. The key to the market might just be to:

1) Educate and train better than other marketers
2) Present and conduct operations in a professional manner
3) Focus on long term strategies and tactics
4) Have the attraction of an Internet or e-commerce business
5) Have a physical presence or office in Singapore

For opportunity seekers in Singapore, you are advised to check for the validity of any company at ACRA (Accounting and Corporate Regulatory Authority) before committing yourself to the business. An influx of companies into Lion City, each with its own brand of MLM and a myriad of compensation plans and products, does not mean that all of them are worth your effort or trust.

If there is such a thing as an MLM war, it would probably be in Singapore right now. The victorious may or may not find the gold in the Promised Land, but the future, as they say, remains to be seen.

SOURCES

ChannelNewsAsia Forum

Chenard, Edward R. and Chooi Ling, Wong. "E-commerce Supremacy in Asia, Part 2
Malaysia Vs. Singapore"

Direct Selling Association of Singapore
(http://www.dsas.org.sg/dsas/Html/afterlogin.htm)

Ho, Andy. "Rules to limit number of levels in MLM needed" The Straits Times Press.

Samidorai, Sinappan. - "Decent Work and Wages for All: Labour Day Message By Think Centre," May 2002.

Singapore Ministry of Manpower - Employment Situation in Fourth Quarter 2004

Singapore Ministry of Trade and Industry. "Multilevel and Pyramid Selling"

Soon, Lee Pheng, Dr. - "Doctors, MLM and Similar Schemes:
Critical Professional Ethics Considerations"- Singapore Medical Association.

Various Online Forums:
http://www.sgwebhostingtalk.com/showthread.php?t=67
http://www.singaporeexpats.com/forum/ftopic15526.html
http://www.singaporeexpats.com/forum/ftopic13158.html

Gobala Krishnan is a freelance writer, Internet marketer, and home business entrepreneur based in Kuala Lumpur, Malaysia. Visit his personal portal http://www.gobalakrishnan.com/