Laws of the People's Republic of China

the Ministry of Commerce, the State Administration for Industry and Commerce

Order of the Ministry of Commerce and the State Administration for Industry and Commerce

No.24

The Measures for the Administration of Information Reporting and Disclosure of Direct Selling Companies, which were deliberated and adopted at the 15th executive meeting of the Ministry of Commerce on October 19, 2005, and approved by the State Administration for Industry and Commerce, are hereby promulgated, and shall come into force as of December 1st, 2005.

Bo Xilai, the Minister

Wang Zhongfu, the Minister

November 1st, 2005

Measures for the Administration of Information Reporting and Disclosure of Direct Selling Companies

Article 1

The present Measures are formulated according to the provisions of Article 28 of the Regulations on Direct Selling Administration.

Article 2

The direct selling company shall establish perfect system on information reporting and disclosure, and accept the supervision and inspection of relevant departments of the government and the supervision of the general public.

Article 3

The websites of the Ministry of Commerce and the State Administration for Industry and Commerce (hereinafter referred to as the SAIC) for the administration of direct selling industry shall promulgate the following items to the society:

1.

relevant laws, regulations and rules;

2.

the announcement on the scope of direct selling products;

3.

the name list of direct selling companies and the list of direct selling products thereof;

4.

the name list of the provincial branches of a direct selling company, and the regions and service networks where they undertake direct selling;

5.

the use of the caution money of a direct selling enterprise;

6.

the patterns of the certificate of sales promoters and the certificate of direct selling trainers;

7.

information on the violation of regulations by direct selling companies, direct selling trainers and sales promoters and the punishment thereof; and

8.

other information necessary to be publicized.

Article 4

The direct selling company shall disclose information to the public through the Chinese website established by it. The Chinese website established by the direct selling company is an important part for information reporting and disclosure of the direct selling company, and shall be linked up with the website for the administration of direct selling industry within three months after the company has obtained the license for direct selling.

Article 5

The direct selling company shall, after its establishment, disclose the following information to the general public in a truthful, accurate, timely and complete manner:

1.

the total number of sales promoters of the direct selling company, the total number and name list of the sales promoters of every provincial branch, the serial numbers of the certificates and occupations of sales promoters, and the name list of the personnel who have rescinded the sales contract with the direct selling company;

2.

the names, addresses, ways of contact and the responsible persons of the direct selling company and its branches, and the names, addresses, ways of contact and the responsible persons of the service networks;

3.

the catalogue of the direct selling products, retail prices, specifications on product quality and standard, and the major components of the direct selling products, suitable users, precautions in the use of the products, and other information that the consumers shall know of beforehand.

Where a direct selling product should be up to the state standard for certification, license or compulsory standard according to the relevant state provisions, the direct selling company shall disclose the certificate documents for obtaining the relevant certification, license or for complying with the standard;

4.

the system for the computation of remuneration of sales promoters and the encouragements on them;

5.

the measures for the returning or changing of direct selling products, the place for the conditions on the returning and changing of goods;

6.

after service departments, functions, complaint telephone and the procedure for handling the complaints;

7.

the rights and obligations of the direct selling company and its sales promoters in the sales contract signed by the direct selling company with its sales promoters, the system for ending the contract by sales promoters, measures for the returning and changing of goods by sales promoters, method for the computation of remunerations and the encouraging system, legal liabilities and other relevant provisions;

8.

the name list of direct selling trainers, the scheme for the training and examination of sales promoters; and

9.

matters concerning the major litigation or arbitration of the company and its treatment.

If there is any alteration in the aforesaid items, the direct selling company shall update the information on the website in time within one month after the alteration of the relevant items (if an administrative license is involved, it shall do so after having obtained the license).

Article 6

After the establishment of a direct selling company, it shall, before the 15th day each month, report and put on archives the following matters of the previous month at the Ministry of Commerce and the SAIC through the website for the administration of direct selling industry:

1.

the deposit and payment of caution money;

2.

the detailed information on the direct sales income and tax payment of sales promoters;

(1)

the monthly direct sales income and the amount of tax payment of sales promoters; and

(2)

the proportion of the amount of direct sales income of sales promoters to the income from the direct selling of products to consumers by sales promoters themselves.

3.

the sales performance and tax payment of the company every month;

4.

the archival filing of direct selling trainers; and

5.

other items necessary to be reported and put on archives.

Article 7

The direct selling company shall, in April every year, publicize the items as listed in Article 5 of the present Measures by way of annual report of the company.

Article 8

The product specifications and publicity materials used by a direct selling company and its sales promoters shall be consistent with the information disclosed by it.

Article 9

Where any direct selling company fails to make information disclosure pursuant to the Regulations on Direct Selling Administration and the present Measures, or the information disclosed by the direct selling enterprise is false or seriously misrepresented or gravely omitted, it shall be punished according to provisions of Article 50 of the Regulations on Direct Selling Administration.

Article 10

The power to interpret the present Measures shall remain with the Ministry of Commerce and the SAIC.

Article 11

The present Measures shall come into force as of December 1st, 2005.