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Direct sales in China

This article was originally published in The Rose Sheet

Executive Summary

Mary Kay and Amway both received direct-selling licenses in China this month. "The direct selling authorization will open a new chapter in the business development of Amway China," company states Dec. 5. Mary Kay China, in a Dec. 8 statement, is similarly optimistic: "We anticipate that our status as a direct-selling company will facilitate our long-term market development in what is our second-largest market." China banned direct selling in 1998 after a rash of pyramid schemes countrywide threatened the stability of its socio-economic infrastructure. Commitments made under China's 2001 accession to the World Trade Organization offered some flexibility, and implementation of the Anti-Pyramid Regulation and Direct Selling Regulation in late 2005 legalized direct selling among licensed firms, though multi-level compensation remains prohibited. Avon says it was first to secure direct-selling permission in March; to date, it has recruited approximately 300,000 licensed sales reps. All three companies have been operating within a retail sales format since China's elimination of "face-to-face" marketing (1"The Rose Sheet" April 19, 1999, p. 9)...

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