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C.R. Sukumar

HYDERABAD, May 12

A SURE way of losing patients is to talk over the phone when your patients are with you, make them wait endlessly, not respect their feelings or opinions, and most of all, have a surly receptionist who is more interested in filing her nails than calling the patients by name.

This prescription can be made universally applicable to any business segment.

It can also prove more hazardous for the developing governments and States, especially in the backdrop of liberalisation, privatisation and globalisation, where the governments have no option but to rope in more entrepreneurs into their domains to stay ahead in the competition.

Andhra Pradesh, which has been winning laurels across the globe through its proactive initiatives for luring major investments into the State, however, appears to have bureaucrats in certain segments who have not adequately updated themselves on the growing nuances in the emerging business models and corporate laws.

While ignorance appears as bliss in their case, it turned out to be a curse for many budding entrepreneurs, who spent years trying to grow strong in network marketing channels.

The ambiguity in legal framework pertaining to the latest business models and the apathy of bureaucrats has taken a toll on companies that adopted network marketing business model in Andhra Pradesh, in general, and companies such as Japan Life and Cantos Marketing, in particular. The bureaucrats and law enforcement officials have been allegedly harassing the distributors of Japan Life accusing them of practicing illegal means that come under the purview of the Prize Chits and Money Circulation Scheme (Banning) Act (PCMCSB), 1978.

However, the State was lucky for not being pictured as a hostile investment destination by the media since its law enforcement authorities spared a host of multinational and large Indian business houses that launched direct marketing companies such as Amway, Oriflame, Modicare, Hindustan Lever and Avon Beauty Products, which market a range of personal and household products.

It appears to be the nature of products of Japan Life that increased suspension over its activities in the eyes of authorities. Japan Life sells magnetic therapy products ranging from sleeping systems to magnetic acupressure pads.

As the harassment continued to grow on its distributors, Japan Life went running from pillar to post in various Union Ministry offices in an attempt to obtain certificates that validate the legality of its business model.

In spite of its success in obtaining and producing the certificates from various Central authorities, the company could not prevent the local law enforcement authorities from harassing its distributors, the Japan Life representative, Mr Bhadresh L. Mehta, told Business Line.

A great relief was provided to Japan Life on May 7 and 8 with the announcements made by the Government in both the Houses of Parliament that the law does not prevent marketing systems such as direct selling and multi-level marketing of goods. The Union Finance Minister made it clear in the Lok Sabha on May 7 that the activities of Japan Life India were not found to be in contravention of the PCMCSB Act.

The Minister for Consumer Affairs, Food and Public Distribution informed the Rajya Sabha on May 8 that the Centre has directed all the States and Union Territories "to avoid harassment and commercial losses to bonafide investors" and to distinguish between companies dealing with activities coming strictly under the purview of the PCMCSB Act and those such as direct marketing, network marketing and multi-level marketing.

However, the Minister, Mr V. Sreenivasa Prasad, informed the House that some of the companies involved direct selling and multi-level marketing reportedly take deposits from agents in advance and that complaints were lodged against such entities under the PCMCSB Act.

As regards the pleas of companies such as Japan Life and Cantos Marketing to save their distributors from the harassment of authorities, the Minister said: "It was found that as long as these companies are selling goods in normal manner just like any other form of marketing of goods, Government need not have to make any special measure for preventing the alleged harassment."

Expressing a high sigh of relief over the latest clearances obtained from Parliament, the Japan Life representative hoped that the State-level law enforcement authorities would now understand the legality of the company's business activities in the right perspective and stop harassing its distributors.

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