The once disputed business of direct selling in China will be properly regulated and relevant regulations are expected to be in place this year, an official with the Ministry of Commerce (MOC) said in Beijing on February 9.

Under the regulations, which will be drafted jointly by the MOC and the nation's General Administration for Industry and Commerce, direct selling is to be strictly distinguished from the notorious pyramid selling schemes.

"The illegal pyramid selling will face a serious crackdown, and meanwhile, legitimate direct selling companies from home and abroad will receive encouragement and support from the Chinese government," Deng Zhan, deputy director general of the MOC's Foreign Investment Administration, told a "US-China Business Dialogue" conference held by the China Council for the Promotion of International Trade (CCPIT).

The meeting was attended by Chinese business people, a US delegation led by Daniel Christman, senior vice president of the US Chamber of Commerce, and management from multinationals such as General Motors Corporation, New York Life International, FedEx Express, Avon Products and Mary Kay Inc.

"To fulfill China's commitment to the World Trade Organization upon its entry and promote the growth of regulated direct selling, China will speed up the legislation process while maintaining its efforts in fighting illegal pyramid selling under various disguises," he said.

Direct selling, due to its natural flaws and the immaturity of China's market and its consumers, was once taken advantage of by swindlers, resulting in illegal pyramid selling.

However, since the year 1998 which saw the all-out prohibition of pyramid selling in China, the top ten foreign-funded direct selling companies have made their way through transformation and had their business back on track, Deng said.

The "US-China Business Dialogue", jointly founded by the CCPIT and the US Chamber of Commerce, aims to study the problems in Sino-US trade and investment.

(China Daily February 10, 2004)