Social unrest triggered by the State Council's ban on direct sales is spreading, with state media being told to play down coverage to avoid fuelling the crisis.
A circular issued by the State Administration of Industry and Commerce urged local officials to maintain order while stepping up their enforcement of the ban.
All industry and commerce departments must 'resolutely eliminate interference from regional protectionism and implement the law strictly, fairly, without corruption and increase the intensity of the enforcement,' it said.
'Violators should be severely punished in accordance with the law.' One provincial official in Hunan said some localities were reluctant to comply, arguing that the sales schemes created desperately needed jobs. 'They are closing one eye,' he said.
Since the State Council announced the ban on April 21, there have been protests across the country.
Many agents were laid-off workers who had used their savings to join companies because they were required to pay firms training fees and deposits for goods.
The most serious riots broke out in Zhangjiajie and Hengyang, in Hunan, where agents smashed cars and shops.
At least 10 people died and more than 100 were injured when the agents failed to get refunds.
In Changsha, several thousand agents held six managers hostage for five days. They were beaten up and threatened with death if they withheld refunds.
Tension was also high in Guangzhou and Shenzhen where agents from outside Guangdong have flocked to companies to demand refunds in the past few days.
Although no riots have been reported, several company owners have been held hostage by agents.
Journalists in Shenzhen said yesterday they had been asked by officials to play down stories about the crisis because the situation was too volatile.
Editors were told by the Shenzhen municipal news department not to run too many stories on direct sales, sources said.
Shenzhen's municipal Government called an emergency meeting on Wednesday to determine the best way of dealing with the situation.
Vice-mayor Yuan Ruwan appealed to all departments to maintain social order and the public image of the special economic zone.
The local Industry and Commerce Bureau was asked to supervise direct sales firms in refunding money to agents. It was asked to recover all cash from the companies following reports that some managers had disappeared.
Shenzhen police were also instructed to stop anyone from instigating unrest.