Direct-sales law unveiled

Direct-sales companies seeking to set up operations in China must have investment capital of at least US$10 million and a turnover of RMB 500 million over the last three years, according to recently unveiled draft legislation. According to the South China Morning Post, the law will likely be promulgated in December and come into force early in 2005. The move is part of an effort to bring order to an industry hit by unfair competition, fraud, consumer losses, tax evasion and smuggling, the paper said. All direct selling was outlawed in 1998 after reports exposed rampant fraud in the industry. However, firms managed to circumvent the ban by selling their products through retail outlets and sales representatives.