According to the new laws, both foreign and domestic players will be able to conduct direct selling, which has been banned on the mainland since 1998. In addition, foreign retail brands will be explicitly allowed to sell via a variety of direct channels - including the internet and telephone - and not just from a fixed point-of-sale (POS).
Senior officials from the Ministry of Commerce and the State Administration of Industry and Commerce recently held a seminar on the draft framework of the direct selling law in Xiamen for 16 foreign and six domestic companies.
The new regulations, expected to come into effect by the end of this year, have been widely anticipated, given the terms of China's WTO accession.
While details of the amendments are unclear, it is believed that companies will have to fulfil a set of onerous financial obligations in order to engage in direct sales.
These include having a registered capital of at least US$10 million, revenues of over Rmb 500 million (US$60 million) in the past three years, mainland manufacturing facilities and a Rmb 20 million guarantee.
Accordingly, many analysts believe that domestic brands will be priced out of the sector. China banned direct selling in 1998 over concerns that it was too similar to pyramid sales which, the Beijing Government claimed, led to fraud and social disorder.
Brands such as Amway and Avon were forced to change their sales mode after the ban. Currently, Avon operates through a network of boutiques, while Amway uses sales representatives. It is unclear which approach the authorities will choose.
However, reports indicate that retail premiums will be restricted to 25 to 30 per cent, and the direct selling price should be similar to the market price. Consumers will be allowed a trial period, during which time they will be fully refunded if they return the product.
In addition, the Measures for the Administration of Foreign Investments in the Commercial Sector, which will take effect on December 11, now spells out that foreign invested retail enterprises can sell goods at fixed locations or via TV, telephone, post and the internet. Previously, it was unclear as to whether such companies could sell away from a fixed POS.
China DMA chairman Gabrielle Chou hailed the amendment as a key development for direct marketers.
"It is very encouraging for the industry to have a law that sets out the rules and regulations for all the direct marketers that want to establish sales away from the point-of- sale," said Chou.
"New players will arrive on the market, and are now making plans to establish a presence."
One of these new players is, reportedly, global botanical beauty brand Yves Rocher.