Direct-selling firms that violate the regulations on direct sales will have their business license revoked, said a circular issued by the Ministry of Commerce on Tuesday.
The circular stipulates that direct selling enterprises must finish setting up their service networks within six months of receiving their license.
The circular said the direct selling enterprises are not allowed to do business before the networks are verified by the ministry and the results recorded.
To protect consumers, direct-selling enterprises must disclose accurate and comprehensive information to the public and may not engage in high-profile promotion activities.
Five companies have been permitted to do direct sales in the Chinese mainland. Three of them, Avon, Pro-health and Nu Skin, are foreign financed.
According to the Ministry's website, another 25 companies, including 9 foreign firms, have applied for direct selling licenses. They have declared that they will abide by China's laws and regulations.
China's direct sales regulations, which took effect in December last year, aim to strengthen supervision of direct sales and protect the legal rights and interests of consumers.
(Xinhua News Agency August 10, 2006)
