What Is Direct Selling?

Direct selling refers to a distribution method in which a direct selling company recruits direct sellers who directly sell products to end consumers outside the fixed business premises. ^[1]

Direct sales

Direct selling refers to a distribution method in which a direct selling company recruits direct sellers who directly sell products to end consumers outside the fixed business premises. ^[1]

Direct sales can also be referred to as direct sales by manufacturers, referring to direct sales

First, direct sales in the form of manufacturer culture.

Second, direct marketing is in the form of dealer culture, and consumption is used to obtain profits. Such direct marketing.

According to the direct sales management regulations, a business enterprise needs to have four conditions. First, the investor has a good business reputation and has no significant illegal business records for five consecutive years before the application is filed. Foreign investors should also have more than 3 years of experience in direct selling activities outside China; the second is the paid-up registered capital of not less than RMB 80 million; the third is the payment of a deposit in full at a designated bank in accordance with the regulations; the fourth is in accordance with the regulations Information reporting and disclosure systems have been established. ^[1]

In 2012, with the exception of one direct sales company with zero direct sales, the remaining 31 direct sales companies achieved a total of 19.937 billion yuan in sales (hereinafter referred to as sales). The direct sales industry paid a total of 5.170 billion yuan in taxes, of which 49.99 100 million yuan, direct sales staff paid 171 million yuan in taxes. ^[4]

There are three aspects of direct marketing:

The first category: Direct Selling

The so-called narrow direct sales are product manufacturers, manufacturers,

Direct Marketing Analysis

After China's entry into the WTO, the rules of the game in the international market economy have been fully introduced, and standardized direct sales will certainly become an organic part of China's market economy. In this regard, we can see from the mature state of the market economy abroad for many years. At present, the Chinese government has also officially followed international standards and promised to open the market in this field within three years after accession to the WTO. Legislative preparation.

Direct marketing has single-level and multi-level (MLM)

About MLM (MULTI-LEVEL MARKETING), it has been in the United States for 50 years. It has been the most advanced way of publicity and

This is the basic operation model of the "through" e-commerce marketing model based on the direct sales model.

Compared with the past three e-commerce models, there are four differences in the through-type e-commerce model:

1. In the A stage, a third-party centralized procurement model is adopted, which is a collective concept of multiple Bs.

2. In the B stage, the method of combining the third-party logistics method and the landing website is adopted to restore the retail concept store in the direct sales system into a distribution station and terminal storage, and add comprehensive service functions.

3. In phase C, interpersonal distribution is adopted, which is the key point to give full play to the role of direct sales personnel.

4. The conversion between D and C will have the double doubling effect of the Internet and interpersonal sales network.

So, how to carry out legal operation on the existing basis, and make a real e-commerce transformation on the basis of a relatively healthy direct selling company, so that it can become a real e-commerce enterprise, and achieve win-win and harmony among individuals, businesses and society. How to implement the through-business e-commerce model at the operational level? I think this is very complicated and simple. Complexity lies in the turbulence and complexity of its foundation and background. Simplicity lies in whether it can work according to laws and rules, and whether it is willing to pay effort and costs.

The following direct selling practices are illegal: direct selling training and exams, charging fees; promoting superstitions, pornography, obscenity, or rendering violence; exaggerating or falsely promoting corporate products, demeaning other products of the same kind, and forcing participants in training to buy products; The past income profile of employees, preaching that most participants will succeed, and so on. ^[1]

It has been nearly 20 years since the direct selling industry entered China. After years of development, the direct selling market in China has gradually matured. The development of direct marketing in China has gone through many twists and turns. Let us review the history of direct marketing in China.

I. The emergence and legislative process of direct marketing in China The direct marketing approach was introduced to China in the early 1990s. Its development has gone through four stages:
First, the rising stage (1990-1993). In November 1990, the first Sino-US joint venture Guangzhou Avon Co., Ltd., the first company in China to apply for registration as a direct sales company, was established, marking the official entry of the direct sales business into China's domestic market. The way in which direct sellers come to explain and sell products has aroused the attention of this new marketing method. Avon's entry and the success of its initial operations played a strong role as a model. Faced with the huge Chinese market, other foreign direct sales companies followed closely and entered China as a wholly-owned or joint venture in 1992. Some domestic companies have followed suit.
Second, the chaotic operation has reached the preliminary standardization stage (1994-1997). With the entry of direct marketing, direct marketing has been used by some criminals to engage in illegal pyramid schemes and "pyramid fraud" under the banner of direct marketing. According to statistics from relevant departments, by the end of 1995, the vast majority of MLM companies nationwide were operating illegally. These companies have neither registered nor standardized marketing methods. Most of them use pull heads or sell products at ridiculously high prices, and some even use direct sales for scams, gangs, and superstitions to stabilize society. And law and order have serious implications. Some illegal MLM organizations use "get rich quickly" as a bait, so that people who do not know the truth can join, which seriously damages the interests of consumers, disrupts market order, and affects social stability. In response, the relevant competent authorities of the Chinese government have successively promulgated a series of regulations and departmental regulations to regulate the chaos in direct sales operations. Nevertheless, the chaos and a large number of illegal fraud activities in MLM operations have not been fundamentally curbed.
Third, it is forbidden to adopt pyramid schemes and some foreign direct-sale companies to transform their operations (after 1998). Due to the relatively low level of market development in China at the time, inadequate regulatory measures, immature consumer psychology, and poor understanding of direct selling methods, coupled with the urgent desire of some people to get rich quickly, many people were deceived and given illegal direct selling operations Take advantage of this opportunity. Faced with the dangers of increasingly serious illegal MLM activities to social stability and consumers' rights and interests, the Chinese government decisively adopted severe measures to prohibit pyramid schemes, and in 1998 issued the "Notice of the State Council on Banning MLM Business Activities." The notice stipulates that no enterprise may engage in pyramid schemes or pyramid schemes in any form. At the same time, the Notice Concerning Issues on Changing the Sales Method of Foreign-invested MLM Enterprises was issued, approving the transformation of 10 foreign direct sales companies including Amway, Avon, and Mary Kay in the United States into store operations and employing salesmen. After 2000, several "Notices" and "Regulations" have been issued to regulate the behavior of transforming enterprises. In 2001, the State Administration for Industry and Commerce set up a special anti-MLM office, which is mainly responsible for cracking down on domestic illegal MLM and related fraud activities and protecting consumer interests.
Fourth, the opening of the direct selling market and the formal introduction of direct selling regulations (September 2005). In accordance with China's economic growth and the development of diversified circulation methods, and fulfilling WTO's relevant commitments, China has accelerated the process of direct selling legislation. In September 2005, the State Council promulgated the Regulations on the Administration of Direct Marketing (Order of the State Council No. 443) and the Regulations on the Prohibition of pyramid schemes (Order of the State Council No. 444), with effect from November 1, 2005 and December 1, respectively Official implementation. The promulgation of the two laws and regulations marked the opening of China's direct selling market and the process of direct selling legislation entering a new stage.

Second, China's direct sales regulations and rules

As of the end of 2004, relevant laws and regulations formulated and promulgated by China's relevant departments to regulate and manage direct sales operations mainly include:

On August 10, 1994, the State Administration for Industry and Commerce formulated and issued the "Notice on Suppressing Illegal Activities in Multi-level MLM Activities" in accordance with the instructions of the State Council.
On September 22, 1995, the General Office of the State Council issued the "Notice on Stopping the Development of Multi-level MLM Enterprises" (Guoban [1995] No. 50), which required all industrial and commercial administrations and other relevant administrative organs to cease approval and registration. Register enterprises and individual industrial and commercial households that carry out business activities by MLM.
In 1996, the State Administration for Industry and Commerce promulgated the "Multiple Levels of MLM Opinions", which officially approved 41 enterprises to conduct MLM; on January 10, 1997, the State Administration for Industry and Commerce issued the "Measures for MLM Management", which is the first time that China has adopted More comprehensive regulations on MLM marketing methods mark a breakthrough in China's legislation in this field;
On April 18, 1998, the State Council issued the "Notice on Prohibition of MLM Business Activities" (Guo Fa [1998] No. 10), which comprehensively banned MLM (including direct sales) activities;
On June 18, 1998, the Ministry of Foreign Trade and Economic Cooperation, the Domestic Trade Bureau and the State Administration for Industry and Commerce promulgated the Notice Concerning Issues on Changing the Sales Method of Foreign-invested MLM Enterprises (Foreign Trade and Economic Cooperation [1998] No. 455), and approved Avon and Amway 10 foreign direct-selling companies including Mary Kay, Mary Kay and others transformed their operations; in 2000, the State Council issued the Notice of the General Office of the State Council on Forwarding Opinions on Strictly Combating MLM and Disguised MLM and Other Illegal Business Activities (State Council issued [2000] 55 number);
In February 2002, the Ministry of Foreign Trade and Economic Cooperation, the Domestic Trade Bureau and the State Administration for Industry and Commerce promulgated the Regulations on Issues Related to the Implementation of the Notice Concerning Issues Related to the Transformation of Sales Methods by Foreign-invested MLM Enterprises (Gongshangzi [2002] No. 31) .