Firm undertakes first step for new R&D centre as it awaits law on direct selling The chairman of the parent company of American firm Amway said yesterday that a draft law in China should define ethical standards for direct selling and distinguish the practice from pyramid schemes. Steve Van Andel, chairman of Alticor, made the comment after signing a letter of interest to build a research and development (R&D) centre in the Zhangjiang Hi-tech Science Park in Pudong, its second in the mainland. The company already has an R&D and production facility in Guangzhou. Amway, which makes and sells personal care, home maintenance and nutrition products, has 3,900 staff and 130,000 salespeople in China, making it one of the biggest employers in the country. With sales last year of 10 billion yuan and 20 per cent of its global revenue, the mainland is Amway's largest market. Under its obligations to the World Trade Organisation, China must lift a blanket ban on direct selling it imposed in 1998 and pass a law regulating it this year. The Ministry of Commerce and the state administrations for industry and commerce are drafting the law. Mr Van Andel, the eldest son of one of the two co-founders of Amway, met officials from both departments in Beijing this week before visiting Shanghai. 'We expect a draft later this year. It is too early to speculate on its contents,' he said. 'It should define the difference between pyramid selling and ethical direct selling, and provide for consumer protection such as production guarantees and the right to return products.' He said the ministry had consulted the World Federation of Direct Selling to learn about laws in other countries. China allows Amway and other foreign direct-selling firms to sell, but only through retail outlets and salespeople registered with the firms, not as independent contractors as is the case elsewhere. Of Amway's mainland sales, more than 60 per cent are through its shops and more than 30 per cent through the sales force. Asked for sales this year and in the future, Mr Van Andel said that as a private company, Amway did not provide such figures. 'In the mid-1980s, 70 per cent of our business was in the United States. Now 80 per cent is outside the US.' The secret of Amway's success in China has been to tap the energy of its salespeople, many of whom sell its products in addition to holding full-time jobs.