Reopening the Direct Selling Industry in China

While the world's (excluding China) direct selling market generates an annual turnover of over US$89 billion with nearly 50 million sales personnel, many foreign companies are keen to engage in direct selling in China, the potentially largest market to be developed. "Direct selling" usually refers to direct selling through sales representatives. The English term has two possible translations in Chinese: chuanxiao (??) and zhixiao (??). There are no unified definitions for both terms in PRC legislation, and in business practice the same problems exist. Following China's all-out ban on direct selling in 1998, chuanxiao was viewed increasingly negatively in the Chinese media and was often directly associated with the notorious pyramid selling schemes.¹ Zhixiao, on the contrary, is now more often used to mean legitimate direct selling (both multi-level and single-level²), excluding pyramid schemes.