Avon Products Inc. has won approval to return to its
favoured direct-selling model in China after seven years in the
China is welcoming back the "Avon Ladies" after seven years in the
Avon Products Inc. has won approval to return to its favoured
direct-selling model in China, a
senior government official said on Monday, rescinding a controversial 1998 ban just days
ahead of 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
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 official, from the department of foreign investment administration, said
that apart from granting a license
to Avon, the ministry was in the process of reviewing applications from other
Other door-to-door direct sellers, particularly major U.S. players such as
Nu Skin Enterprises Inc. and
Amway, 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.
firms to China's market.
Beijing had promised to lift the
ban within three years of joining the World Trade Organisation
in late 2001.
The American Chamber of Commerce, eager for U.S. firms 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 legalising direct selling operations as promised," the
Chamber said in its 2005 White Paper.
Avon posted a 16 percent drop in third-quarter sales in China after beauty
boutiques cut back on the U.S. firm's products, afraid of losing out to a new
cadre of "Avon Ladies" once China lifted the ban.