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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. |
China is welcoming back the "Avon Ladies" after seven years in the
cold.
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 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 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 direct-selling companies.
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.
(Reuters) | 
