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Economic conditions

China's Direct Selling Market on Hold as Regulation Remains Delays

Strategic Insights

— 1 min read

China's delay in finalizing a regulation to govern the direct selling industry has left foreign companies waiting with patience, according to officials from the World Federation of Direct Selling Associations. The federation, which represents top executives from 18 direct selling companies worldwide, has expressed concerns over the delay, citing the need for a clear and comprehensive regulation to guide the industry. Despite the delay, the federation remains optimistic, hoping that the finalized regulation will bring positive changes to the industry, including maximum competition and protection for consumers and salesmen.

Key Takeaways:

  • The World Federation of Direct Selling Associations is concerned about the delay in finalizing a regulation to govern the direct selling industry in China.
  • Foreign direct-marketing companies have the patience to wait for the regulation, according to Neil H. Offen, secretary-general of the federation.
  • The draft regulation requires direct sellers in China to have at least 80 million yuan (US$9.67 million) in registered capital and pay a deposit of 20 million yuan (US$2.4 million).
  • The regulation also includes requirements on the number of fixed retailing stores and minimum business revenue.
  • Dick DeVos, chairman of the federation, expects the regulation to provide maximum competition and protection for consumers and salesmen.
  • The direct-selling business has an annual value of US$90 billion worldwide and has 50 million salesmen.
  • China imposed a ban on direct sales in 1998 due to concerns over pyramid sales, but allowed 10 foreign-funded direct-selling companies to continue operations with modified sales modes.

Statistics:

  • The direct-selling industry has an annual value of US$90 billion worldwide.
  • The industry has 50 million salesmen worldwide.
  • The draft regulation requires direct sellers in China to have at least 80 million yuan (US$9.67 million) in registered capital.
  • The country has allowed 10 foreign-funded direct-selling companies to continue operations with modified sales modes since the 1998 ban.

Sources:

  • XIC (Xinhua Industrial Corporation) - 13-01 1745
  • World Federation of Direct Selling Associations - Exact reference not provided, but mentioned in the text as the source of quotes from Neil H. Offen and Dick DeVos.

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