Others News
- More companies licensed for direct sales market
Date: 1-Feb-2007 Sources: (Xinhua Online)
Movie lovers may still remember the Avon lady in 'Edward Scissorhands' who discovered the protagonist Edward while selling cosmetics.
Armed with a suitcase of face powder and concealer, the character was eager to sell products to her neighbors through personal demonstrations after a little gossip.
Consumers in China may soon also be receiving such visits by salespeople as the government reopened the direct sales market after a seven-year ban.
Companies with the approval of authorities are moving to recruit sales representatives and train them to sell products by making face-to-face contact with people in their homes or offices.
Amway (China) Co Ltd will begin to recruit direct-salespeople and start training this month. The US-based firm received its license in December and was among the latest batch of companies approved by the Ministry of Commerce to conduct door-to-door sales on the mainland.
'China's reopening of direct sales is fantastic news for us,' said Audie Wong, president of Amway (China) Co Ltd.
'The company is preparing training programs to make sure our prospective salespeople follow the new regulations.'
Amway said direct sales will make up a major part of its revenue, but it still plans to expand its network of stores across the country. The nutritional products and cosmetics maker runs 188 outlets across China.
Wong, however, declined to disclose the target number of its direct salespeople, nor would he offer a sales forecast for this year.
Amway has been joined by other overseas-funded direct-sales companies anxious to penetrate the market.
Also from this month, Sweden-based Oriflame Cosmetics will start to recruit and train direct-salespeople and then begin door-to-door sales.
The cosmetics company said last month it will first launch its sales teams in Jiangsu Province and offer more than 79 products. At the same time, it will open retail stores in Shanghai, as well as in the provinces of Sichuan and Guangdong. The firm already has an outlet in Chengdu, Sichuan, and Nanjing in Jiangsu.
Oriflame received a license in September from the Ministry of Commerce to conduct direct sales in Jiangsu, including the cities of Wuxi and Suzhou.
Unsure about how things will turn out, company officials declined to give further details about the number of door-to-door sales people it will employ or a sales forecast.
While some direct sellers have yet to recruit a sales team, some already have people ready to go.
Avon Products Inc, the world's largest door-to-door cosmetics seller, had recruited more than 350,000 sales representatives on the mainland by the end of last year.
The cosmetics retailer said last month it would further improve its direct selling services this year and decrease delivery time for purchases.
Avon, which obtained its license in February 2006, was the first among its counterparts to be allowed to conduct door-to-door sales on the Chinese mainland.
The Chinese government banned all forms of direct sales in 1998 in an effort to rein in rampant fraud involving pyramid schemes. The ban was a major blow to several legitimate direct-sales companies such as Avon and Amway, which had just started building up sales networks.
The commerce ministry reopened the market in December 2005 with new regulations as part of its commitment to join the World Trade Organization.
Under the new rules, direct retailers are required to have at least 80 million yuan (US$10.3 million) in registered capital before they can receive government approval. Foreign companies, such as Mary Kay (China), which are hoping to enter the market must have conducted direct sales overseas for at least three years. Companies also must pay a 20 million yuan deposit into a government-appointed bank account as a guarantee to protect customers.
Direct-sales companies are not allowed to recruit people under the age of 18, full-time students, teachers, expatriates, or civil servants to work as salespeople.
The rules also require that both sales representatives and customers can refund or exchange products that haven't been unpacked within 30 days of purchase provided they have an invoice or receipt.
Thus far, a total of 14 companies have gained licenses for door-to-door sales - 10 are overseas-invested companies.
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