Direct Selling News August 5th(Xiao Xiao) “Traffic rules require driver to fasten safety belt with the purpose of avoiding car accidents.Driving ‘direct selling car’ also should fasten ‘safety belt’ well,which can prevent the phenomenon of violations of direct selling or even suspected of being involved in pyramid schemes.”Ouyang Wenzhang,

expert of direct selling expert committee of the China social market association,said the above words to reporters of Direct Selling News.

Over years,Ouyang Wenzhang has written plenty of articles about the research on how direct selling industry carrying out the direct selling regulations both in theory and practice.He thinks that Regulations on Administration of Direct sales and Regulations on Prohibition of Chuanxiao are the most important rules which must be obey at present,any deviation will be received severe supervision by government.”Why NU SKIN violate regulations in China?The fundamental reason is that it didn’t fasten ‘safety belt’ well which made ‘direct selling car’ lose the correct direction.”said by Ouyang Wenzhang.The ‘safety belt’of direct selling industry are direct selling regulations and other relevant policies,to fasten this ‘safety belt’ well can lead the development of direct selling enterprises’business in the right direction.At present,what kind of aspects showing the direct selling industry hasn’t fastened’safety belt’ well?There are there main problems as per Ouyang Wenzhang:

First is the premium system which has overemphasized “cause-oriented’ on design,second is the appearance of pyramid schemes style ‘brainwash’ in education training,third is that the effect of products has been purposely exaggerated by direct sellers.According to this,Ouyang Wenzhang has made below policy interpretation on how to fasten the ‘safety belt’ of direct selling well:

—— The publicity of direct selling products in business and sales promotion.

Regulations on Administration of Direct sales has clearly outlined that if any direct selling enterprise engages in direct selling business activities beyond the scope of direct selling products,the Administration for industry and Commerce shall order rectification,confiscate the direct selling products and the illegal sales income,and impose a fine of not less than RMB 50，000 and not more than RMB 300，000. If the case is serious，a fine of not less than RMB 300，000 and not more than RMB 500，000 shall be imposed，the business license of the branch of the direct selling enterprise that has illegal business conduct shall be revoked by the Administration for Industry and Commerce or the direct selling business license of the direct selling enterprise is revoked by the State Council department in charge of commerce.If a direct selling enterprise and its direct sellers,in violation of the provisions of Regulations on Administration of Direct sales， have fraudulent and misleading publicity and marketing conduct，the Administration for Industry and Commerce shall impose on the direct selling enterprise a fine of not less than RMB 30，000 and not more than RMB 100，000;If the case is serious， a fine of not less than RMB 100，000 and not more than RMB 300，000 shall be imposed，and the business license of the branch of the direct selling enterprise that has illegal business conduct shall be revoked by the administration for industry and commerce，or the direct selling business license of the direct selling enterprise shall be revoked by the State Council department in charge of commerce.The Administration for Industry and Commerce shall impose on the direct seller a fine of not more than RMB 50，000;If the case is serious,the direct selling enterprise shall be ordered to revoke his qualification as a direct seller.

—— The recruitment and training of direct sellers

If a direct selling enterprise and its branches recruit direct sellers in violation of the provisions of Regulations on Administration of Direct sales， the Administration for Industry and Commerce shall order rectification and impose a fine of not less than RMB30，000 and not more than RMB 100，000. If the case is serious，a fine of not less than RMB 100，000 and not more than RMB 300，000 shall be imposed,and the business license of the branch of the direct selling enterprise that has illegal business conduct shall be revoked by the Administration for Industry and commerce,or the direct selling business license of the direct selling enterprise shall be revoked by the State Council department in charge of commerce.If anyone engages in direct selling activities without obtaining a direct seller certificate， the Administration for Industry and Commerce shall order rectification and confiscate the direct selling products and the illegal sales income,and may impose a fine of not more than RMB 20，000. If the case is serious,a fine of not less than RMB 20，000 and not more than RMB 200，000 shall be imposed.If a direct selling enterprise conducts the business training of direct sellers in violation of the provisions of Regulations on Administration of Direct sales,the Administration for Industry and Commerce shall order rectification,confiscate the illegal income and impose a fine of not less than RMB 30，000 and not more than RMB 100，000. If the case is serious，a fine of not less than RMB 100，000 and not more than RMB 300，000 shall be imposed，and the business license of the branch of the direct selling enterprise that has illegal business conduct shall be revoked by the Administration for Industry and Commerce,or the direct selling business license of the direct selling enterprise shall be revoked by the State Council department in charge of commerce. The administration for industry and commerce shall impose a fine of not more than RMB 50，000 on the instructor,If the instructor is a direct seller trainer,the direct selling enterprise shall be ordered to revoke his qualification as a direct seller trainer.If any work unit or individual other than a direct selling enterprise organizes business training of direct sellers，the Administration for Industry and Commerce shall order rectification，confiscate the illegal income and impose a fine of not less than RMB 20，000 and not more than RMB 200，000.

—— The sales promotion actions of direct sellers

If the direct sellers market products in a forcible manner without the permission of the consumer,without showing his direct seller certificate and marketing contract,without explaining the goods return policy of the enterprise to the consumer in detail before closing a deal,without providing the consumer with an invoice and a sales voucher after closing a deal,the Administration for Industry and Commerce shall confiscate the illegal income and impose a fine of not more than RMB 50，000 ; If the case is serious,the direct selling enterprise shall be ordered to revoke his qualification as a direct seller,and the Administration for Industry and Commerce shall impose on the direct selling enterprise a fine of not less than RMB 10，000 and not more than RMB 100，000.Direct selling enterprises shall mark prices on direct selling products and such prices shall be consistent with the product prices displayed at the service outlets.Direct sellers must market products to consumers at marked prices.If a direct selling enterprise violates this provision,the matter shall be handled in accordance with the relevant provisions of the Pricing Law.

—— Remuneration to direct sellers

Direct selling enterprises shall pay remuneration to direct sellers at least once a month. The remuneration payable to a direct seller by a direct selling enterprise shall be calculated exclusively on the basis of the income from the sales of products made by the direct seller directly to consumers, the total amount of the remuneration （including commissions， bonuses， rewards in all forms and other economic benefits） may not exceed 30% of the income from the sales of products made by the direct seller directly to consumers.Direct selling enterprises shall set up and implement a sound goods replacement and return system.If a direct selling enterprise violates this provision，the Administration for industry and commerce shall order rectification and impose a fine of not less than RMB 50，000 and not more than RMB 300,000;If the case is serious,a fine of not less than RMB 300，000 and not more than RMB 500，000 shall be imposed，and the business license of the branch of the direct selling enterprise that has illegal business conduct shall be revoked by the Administration for Industry and Commerce，or the direct selling business license of the direct selling enterprise is revoked by the State Council department in charge of commerce.

——an information filing and disclosure system

Direct selling enterprises shall set up and implement a sound information filing and disclosure system according to relevant provisions,any violations of this provision,the Administration for Industry and Commerce shall order rectification in limit time and impose a fine of not more than RMB 100，000.If the case is serious，a fine of not less than RMB 100，000 and not more than RMB 300，000 shall be imposed;If still refuse to rectify,the business license of direct selling enterprise shall be revoked by the State Council department in charge of commerce.Direct selling enterprises shall open a dedicated account with a bank designated jointly by the State Council department in charge of commerce and the State Council administration for industry and commerce，and make a security deposit into the account,any violations of this provision,the Administration for Industry and Commerce shall order rectification in limit time and impose a fine of not more than RMB 100，000.If still refuse to rectify,a fine of not less than RMB 100，000 and not more than RMB 300，000 shall be imposed and the business license of direct selling enterprise shall be revoked by the State Council department in charge of commerce.▲

Editor:Jack