Direct sales deadline today, firms still waiting
By Diao Ying and Wang Lan (China Daily)Updated: 2006-12-01 08:47
The two firms are Avon, the world's biggest direct seller of beauty products, and For You, a manufacturer of health products.
China's direct selling regulations, which came out in December 2005, forbid pyramid-style selling, a traditional business model for direct sellers.
Among the eight companies who have not been authorized by the government, Tupper, Menard and Naris have pulled out of the direct selling market in China. Amway, Mary Kay, Daylight, Sunhope, and Perfect have made adjustments to their business models to meet the requirements of China's direct selling regulations.
"These companies are undergoing a transition process. They are working on new structures," said Liu Zhong, a lawyer focusing on direct selling with the Beijing Dacheng law firm.
The major difficulty for the firms, according to Liu, is "how to change the 'multi-level' selling mode into the 'single' level, which is required by the direct selling regulation."
He said the waiting not only increases operational costs, but "enterprises will have to transform their distribution team, which can be a very complicated process, and means the government will need a much longer time for the investigators to grant licences."
Amway has a distribution team of 180,000 people across China.
The Ministry of Commerce has been cautious in giving the licence.
In September, it revoked the license of Zhen-Ao Group for its false publicity
and bidding materials.
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