Obtaining a direct sales license in China involves navigating a comprehensive regulatory framework established to oversee direct selling activities.
It’s important to note that while direct selling is permitted, multi-level marketing (MLM) structures are prohibited in China. The regulations strictly forbid compensation based on the recruitment of new sales people.
Given the complexity of the application process and the stringent regulatory environment, it is advisable to consult with legal experts or professional consultants who specialise in Chinese commercial law to ensure full compliance and to facilitate a successful application.
The key regulations governing this process are the “Regulation on Direct Selling Administration” and the “Regulation on Prohibition of Chuanxiao (Pyramid Selling),” both enacted in 2005. These regulations permit direct selling under stringent conditions to prevent pyramid schemes and ensure market stability.
Eligibility Criteria:
To qualify for a direct sales license, an applicant must meet the following conditions:
Corporate Status: The applicant must be a legally established corporate entity. The applicant for the Direct Sales License has to set-up a FIE (i.e. Foreign Invested Enterprise) in the form of a WFOE, thus it is necessary to get the approval of the MOFCOM for this proposed investment. The investment is going to be approved only if the investor