Multi-level Direct Legal System

According to the promise made by the Chinese government on its accession into WTO, the state should regulate direct sales after its ban on Multilevel Direct Selling. Currently, the Ministry of Commerce and the State Administration of Industry and Commerce are working on legislation concerning direct sales and the focus of their work will be on the regulation of Multilevel Direct Selling.Multilevel Direct Selling, is a kind of marketing pattern using the network set up by the direct-seller to sell goods or services, and it rewards sellers or organizations according to their sales volume. It is not only the most attractive way of doing direct sales but also the most controversial one at the same time.Multilevel Direct Selling should be identified and regulated by statute. On one hand, as a herald of economic entrepreneurship, distribution and competition, Multilevel Direct Selling was born under the circumstance of a market oriented economy, and should be encouraged and protected by law; on the other hand, the negative consequences accompanying it should be prevented, regulated and even punished by law. Looking through the development of Multilevel Direct Selling in different parts of the world, they all have experienced the amateur phase; they all used to be banned because of the chaos caused by the lack of regulation; and they were all finally regulated by law.Most countries all over the world permitting direct sales have acts to regulate the action of Multilevel Direct Selling. In spite of their differences, official surveillance and regulation, anti-Pyramid Selling and the "cooling-off period" system remain unanimously their focus. In due course, this paper has done some analysis and comparison in the three aspects above and has come up with some beneficial revelations.The Chinese legislation on direct sales has gone though the period of amateur experimentation, complete ban, re-opening and the period of comprehensive legislation. This paper also has done some analysis and comparison in the three periods of evolution above of Chinese legislation on Multilevel Marketing, and offered some policy background for minor and radical reforms of it.The contemporary regulation of Multilevel Direct Selling in China bears the problems of the legislative lag; the absence of official guidance; the disorder caused by the different treatment of domestic and international enterprises and the insufficiency of government control.Having studied the key points of China's fulfillment of its promise to regulate Multilevel Direct Selling and having referenced the beneficial experiences of other countries, this paper offered the following suggestions:1 .Clarify guiding ideology. 1) Make "complete regulation of the Chinese Multilevel Direct Selling" the purpose and motive of legislation. 2) Make stability the priority over development.2.Establish perfect and systematic regulation of Multilevel Direct Selling. 1) Clarify the definition and legitimate position of Multilevel Direct Selling. 2) Establish reasonable qualifications for entering the Direct-Selling market. 3) Clarify the definition of "Pyramid Selling" and enforce strict regulation. 4) Establish a reasonable "cooling-off period" system.3.Improve the efficiency of government control. 1) Establish government surveillance of and control systems for corporations. 2) Improve control efficiency.