Chapter IV Direct Selling Activities
Article 22 A sales promoter shall abide by the following provisions when selling products to consumers:
1. Showing the certificate of sales promoter and the sales contract;
2. Not entering into the residence of any consumer to make hard sell on products without the consent of the consumer, if the consumer requires him to stop the sales activity, he shall stop it immediately and leave the consumer’s residence;
3. Making detailed introduction to consumers on the company’s system of returning goods before the bargain is struck; and
4. Providing invoices to consumers and the sales credence containing such contents as the system of returning goods, the address of the local service networks of the direct selling company and the telephone number, and etc. issued by the direct selling company after the bargain is struck.
Article 23 A direct selling company shall mark the product price on any direct selling product, and the price shall be consistent with the price of the product as showed at the service networks. A sales promoter shall sell products to consumers according to the marked price.
Article 24 A direct selling company shall pay remunerations to its sales promoters by month at least. The remunerations paid to any sales promoter by a direct selling company shall be calculated on the basis of the income gained from directly selling products to consumers by the sales promoter himself/herself, and the total remunerations (including commission, bonus, various awards and other economic benefits, and etc.) shall not exceed 30% of the income gained from directly selling products to consumers by the sales promoter himself/herself.
Article 25 A direct selling company shall establish and implement sound system of changing goods and returning goods.
Any consumer may, within 30 days from the day of purchasing any direct selling product, and under the condition that the product is not opened, change or return the product to the direct selling company or its branches, the service networks at his locality or the sales promoter that sells the product upon the strength of the invoice or the sales credence issued by the direct selling company. The direct selling company and its branches, the service networks at his locality and the sales promoter shall, within 7 days from the day when the consumer requests for changing or returning the product, handle the change or return of the product according the price as clarified in the invoice or the sales credence.
A sales promoter shall, within 30 days from the day of purchasing any direct selling product, and under the condition that the product is not opened, change or return the product to the direct selling company or its branches, or the service networks at his locality upon the strength of the invoice or the sales credence issued by the direct selling company. The direct selling company and its branches, or the service networks at his locality shall, within 7 days from the day when the sales promoter requests for changing or returning the product, handle the change or return of the product according to the price specified in the invoice or the sales credence.
Except the circumstances as prescribed in the preceding two paragraphs, if any consumer or sales promoter requests changing or returning any product, the direct selling company or its branches, the service networks at its locality or the sales promoter shall, according to the provisions of the relevant laws and regulations or the stipulations of the contract, handle the change or return of the product.
Article 26 In case any dispute arises between any direct selling company and any of its sales promoter or between any direct selling company or its sales promoters and any consumer due to the change or return of goods, the burden of proof shall be borne by the former.
Article 27 A direct selling company shall be responsible jointly and severally for the direct selling acts of any of its sales promoters, unless it can prove that the direct selling act of any sales promoter has nothing to do with the company.
Article 28 A direct selling company shall, according to the provisions of the competent department of commerce of the State Council and the administrative department of industry and commerce of the State Council, establish and implement a perfect information reporting and disclosure system.
The contents, ways of the information reporting and disclosure of any direct selling company and the relevant requirements shall be prescribed separately by the competent department of commerce of the State Council and the administrative department of industry and commerce of the State Council.
Chapter V Deposit
Article 29 A direct selling company shall open a special account in the bank designated by the competent department of commerce of the State Council and the administrative department of industry and commerce of the State Council together to deposit a deposit into it.
The deposit shall be RMB 20 million Yuan at the time when a direct selling company is established. After the direct selling company starts operation, the deposit shall be adjusted monthly, and the amount shall remain at 15% of its sales income from direct selling products in the previous month, but shall not exceed RMB 0.1 billion Yuan at the maximum, and shall be no less than RMB 20 million Yuan at the minimum. The interests of the deposit shall be owned by the direct selling company.
Article 30 In case any of the following circumstances occurs, upon the common decision of the competent department of commerce of the State Council and the administrative department of industry and commerce of the State Council, the deposit may be used:
1. A direct selling company fails to pay remunerations to its sales promoters without justifiable reasons, or fails to pay the money for returned goods to sales promoters and consumers;
2. A direct selling company occurs such circumstances as stopping operation, merger, dissolution, transfer and bankruptcy and etc., and is unable to pay remunerations to sales promoters or is unable to pay money for returned goods to sales promoters or consumers; or
3. A direct selling company causes any damage to consumers due to the quality of the direct selling products and should make compensation according to law, but the company refuses to make compensation without justifiable reasons or is unable to compensate.
Article 31 Where any deposit is used according to the provisions of Article 30 of the present Regulation, the direct selling company shall make up in full amount the deposit to the level as prescribed in paragraph two of Article 29 of the present Regulation within one month.
Article 32 No direct selling company may make guaranty with the deposit or use it to pay off debts in violation of the present Regulation.
Article 33 In case any direct selling company no longer undertakes any direct selling business, it may, upon the strength of the credence issued by the competent department of commerce of the State Council and the administrative department of industry and commerce of the State Council, withdraw the deposit from the bank.
Article 34 The competent department of commerce of the State Council and the administrative department of industry and commerce of the State Council shall be jointly responsible for the routine supervision of the deposit.
The concrete measures for depositing and paying and using the deposit shall be formulated separately by the competent department of commerce of the State Council and the administrative department of industry and commerce of the State Council together with the relevant departments.
Chapter VI Supervision and Administration
Article 35 The administrative department of industry and commerce shall be responsible for the routine supervision and administration on direct selling companies and sales promoters and their direct selling activities. The administrative department of industry and commerce may make on-site inspections by taking the following measures:
1. Making inspection by entering into the relevant enterprises;
2. Requiring the relevant enterprises to provide the relevant documents, materials and certificate documents;
3. Inquiring of the parties concerned, the interested parties and other relevant personnel about the relevant issues, and requiring them to provide the relevant materials;
4. Consulting, copying, sealing up and detaining the relevant materials and illegal property of the relevant enterprises in relation to direct selling activities; and
5. Inspecting the certificate of direct selling trainer and the certificate of sales promoter and other certificates of the relevant personnel.
When conducting on-site inspections according to the preceding provisions, the inspectors of the administrative department of industry and commerce shall be no less than two persons, and shall show lawful certificate. The implementation of seizure or distraint shall be subject to the approval of the person-in-charge of the administrative department of industry and commerce at or above the county level.
Article 36 When the administrative department of industry and commerce conducts routine supervision and administration, and discovers that the relevant enterprises have any act being suspected of violating the present Regulation, it may, upon the approval of the person-in-charge of the administrative department of industry and commerce at or above the county level, order them to suspend the relevant management activities.
Article 37 The administrative department of industry and commerce shall set up and announce the offense report telephone, and accept the report and complaints on acts in violation of the present Regulation, and make investigation and handling in time.
The administrative department of industry and commerce shall keep secrets for the person making the report; and shall give awards to those who have made good contribution in reporting offenses according to the relevant state provisions.
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