China OKs Direct Sales by Avon
China is welcoming back the Avon ladies after seven years in the cold.
Avon Products Inc. has won approval to return to its favored direct-selling model in China, a senior government official said Monday. The government rescinded a controversial 1998 ban just days before a visit to Beijing by U.S. trade officials.
Avon is the world’s largest direct seller of cosmetics, using legions of representatives to sell to customers at home rather than moving its products through stores.
But in 1998, Beijing shut the door on direct sales in a blanket ban aimed at curtailing domestic pyramid schemes, forcing Avon to begin selling its products through beauty boutiques.
The ban sparked rioting and looting in central China after thousands were left holding goods bought with life savings, and some provincial officials said it left residents without desperately needed jobs.
The senior government official, from the department of foreign investment administration, said that apart from granting a license to Avon, the agency was reviewing applications from other direct-selling companies.
Other door-to-door direct sellers, particularly major U.S. players such as Nu Skin Enterprises Inc. and Amway Corp., stand to benefit from China’s moves to restore direct selling.
“The Commerce Ministry of China is currently reviewing our application, and we believe Nu Skin would receive the license soon in the coming months,” Nu Skin said in a statement.
Senior U.S. officials from the trade representative’s office are due to meet with their counterparts in Beijing this week to discuss wider access for U.S. companies to China’s market.
Beijing had promised to lift the ban within three years of joining the World Trade Organization in late 2001.
The American Chamber of Commerce, eager for U.S. companies to tap more remote, rural markets in China through door-to-door selling, has been pushing for China to reinstate the practice.
“Many firms have invested hundreds of millions of dollars in the China market, and most industry executives are hopeful that China will comply with its WTO obligations by legalizing direct-selling operations as promised,” the chamber said in a report last year.
