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China Lifts ban on direct sales

(from the Shanghai Daily)
China announced plans Friday to lift a seven-year-old ban on door-to-door sales and issued new regulations for the direct sales market in an effort to meet commitments made during its bid to join the World Trade Organization.

China had promised to open the direct sales market by the end or last year prior to joining the WTO. The ban will end on December 1.

Direct sales were banned in 1998 amid reports of rampant fraud and pyramid sales schemes. The ban came as a major blow to some of the world’s largest direct sales companies, such as Avon and Amway, which had only started to build up sales networks in the country.

However, the new law does not allow pyramid schemes in which sellers earn a small commission from all the people behind them. Also sales commission cannot exceed 30% of total income. Furthermore, foreigners like myself cannot be involved. This might hamper growth inititially, but because Chinese like to work hard to earn money I think it will take off very quickly after that. It is a good business model for huge countries like China where it is difficult to sell your goods everywhere.

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