Direct sales in China will become legal from Dec 1, the Information Times reported, citing Shang Ming, a senior official with the Ministry of Commerce.
The newspaper said the new law, just approved by China's State Council, the country's cabinet, requires direct sellers to pay a minimum 20 mln yuan deposit before setting up business and to have a registered capital of at least 80 mln yuan.
Maximum commissions for individuals engaged in direct sales will be 30 pct, up from 25 pct previously before direct sales were banned in 1998.
The newspaper said the new law has tightened some requirements for companies which apply for direct sales licenses, including not having incidences of irregularities over the past five years.
It quoted an unidentified industry source as saying about 25 domestic and foreign companies are currently eligible to apply for direct sales licenses.
The first batch of direct sellers to be granted licenses are expected to start operations in China at the beginning of next year, said the newspaper.
It said the State Council has also approved legislation which would shut down illegal pyramid sales, which will take effect on Nov 1.
China banned direct sales in 1998 due to widespread problems with pyramid schemes and other fraudulent activities, forcing firms like Avon to sell through retail outlets.
Companies engaged in direct sales have long been anticipating approval of the new law, with foreign direct sellers already opening new stores in China.
Amway's outlets in China have now topped 160, with Nu Skin operating over 150 stores across the country.
(1 usd = 8.1 yuan)
