CITCC collects the latest information about the development of direct selling sector in China for those who want to have an insight to the direct selling sector in China. (For reference only!)
Recall the development of direct selling in China in 1990s
Direct selling entered into China in 1990s initially. In 1986, 41 enterprises of multi-direct selling were approved by the Industrial and Commercial Bureau and in late 1996, 500 more were also approved. In January 1997, the first regulation on direct selling was released. But in April 1998, direct selling was banned for its caused social problems in China. Besides, only ten received the permission license which should transmit to the "Shop plus Promotion Sales Person" model to do business in China. They are Amway, Avon, Marykey, Rihui, Fudi, Nanis, Sunhope, Perfect and Tupperware.
The regulations to be released in the near future raise great attention among the enterprises home and abroad as well as overseas Chinese.
The Regulations on direct selling sector
China re-opens its direct selling market guided by three principles: enhancing market supervision, keeping consumers' benefit and building China-featured direct sales systems. China has set rules of permit, security deposit and vocational training on a basis of equalization, fair play and common promotion.
1、Registration Capital: USD10,000,000 min.
2、Joint Venture: More than 5-year experience in direct selling business and a registered member of World Federation of Direct Selling Associations.(WFDSA) Chinese Companies: the turnover should be over CNY500million in the first consecutive 3 years.
3、Own plants and shops in China and all the products made by themselves.
4、The direct selling products must be health-care products, cosmetics and daily commodities only.
5、A sum of CNY20-30 million as guarantee should be deposited to the administration department for handling consumers' problems and other emergencies.
6、More than ten franchised stores should be set up in municipal or provincial cities
7、According to international practice, the income of direct seller should be reduced from 50-55% to 25% of the seller's own sales turnover in order to protect the costumers' benefit that might be effected by over high price.
8、A direct seller must hold a profession certificate and can only serve in one company. The company that recruits a direct seller must sign an Employment Contract with the seller.
9、The direct seller should not do business beyond its company regulations.
10、The vocational training is commonly carried out at its headquarter and no more than 600 employees from the headquarter in each training course, less 400 from its provincial branch, less 200 from its municipal branch and less 50 from its regional.
The price should be not higher than that of the same products in other local franchised store. Civil servants, on-duty army, full-time students and minors are banned to do business in direct selling sector.
Opportunities of direct selling sector in China
Direct selling globally development trend
To approach the manufacturers and customers, direct selling make this new sales come true and now it is leading the sales trend. With the development of direct selling, the sales system will be implemented as well as the direct seller.
Huge capacity for direct selling sector development
The Chinese market for direct selling is huge and promising. It is estimated that the capacity of direct selling in Chinese market is over CNY40 billion, more than one billion people's demand and its rapid development at a speed of 25% per year which attracts highly attentions of many enterprises from home and abroad. So far, Amway gets the annual profits of over CNY6 billion; Perfect along with other two companies gets the net profits of over CNY10 billion. The Chinese direct selling market as a huge magnetic field attracts large investment from a lot of enterprises from home and abroad.
Advantages of overseas Chinese doing business in direct selling sector
(1) Acquaint with many world famous brands in the direct selling sector
(2) With an open-minded conception to direct selling sector and willing to try new things
(3) Being an agent aboard to get more profit than that in China
(4) More vocational training courses to implement the direct seller-self in a foreign-based enterprises
Differences between direct selling and trans-direct selling
Direct seller profits from selling the products to end-users while trans-direct selling profits from commotions that gain by net more people not the products.
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