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Avon Products Inc. has won approval to return to its favoured direct-selling model in China after seven years in the cold.
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China is welcoming back the "Avon Ladies" after seven years in the cold.
Avon Products Inc. has won approval to return to its favoureddirect-sellingmodel in China, a senior government official said on Monday,rescindinga 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 through stores.
But in 1998, Beijing shut the door on direct sales in ablanket banaimed 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 fromgranting a licenseto Avon, the ministry was in the process of reviewing applications from other direct-selling companies.
Other door-to-door direct sellers, particularly major U.S. players such asNu SkinEnterprises Inc. andAmway, 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 tolift the banwithin three years of joining the World Trade Organisation in late 2001.
The American Chamber of Commerce, eager for U.S. firms totapmore 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.
(Reuters) |
