BEIJING, Sept. 5 -- The State Council said it would allow direct selling in the country from Dec. 1, lifting a seven-year ban on the practice.

The scrapping of the ban, announced in a statement posted on the Xinhua Web site, will give door-to-door retailers such as Avon Products and Amway wider access to the Chinese market.

The ban's removal is part of China's commitment to the World Trade Organization, with the government pledging to the trade body in its 2001 entry agreement that it would set up rules on how companies can distribute their products inside the country by last December.

Direct-selling companies have had to rely on retail outlets to sell products in China since door-to-door selling was banned in 1998 after the collapse of several pyramid sales plans caused millions of yuan of losses to individuals caught up in sales networks.

Direct retailers must have at least 80 million yuan (US$9.86 million) in registered capital, and foreign companies must have at least three years of direct sales experience outside China.

Companies applying to carry out direct sales must place a deposit of 20 million yuan, the statement said. Direct sellers found guilty of breaches, such as bribery or cheating customers, can be fined as much as 500,000 yuan.

Pyramid selling remains off-limits and new regulations prohibiting multi-level sales schemes would go into effect from Nov. 1, Xinhua said.

(Source: Shenzhen Daily/Agencies)