Beijing plans to tighten regulations on how direct-sales companies train sales staff and introduce products, as authorities probe allegations of abuses by Nu Skin Enterprises, said two people familiar with the matter.
The State Administration for Industry & Commerce is drafting rules that would regulate training of the sales force, monitor marketing meetings and tighten application procedures when direct-sellers sought to enter new regions in the country and offer new products, said the people, who asked not to be identified as the matter is not public.
Tighter restrictions stand to affect the mainland Chinese operations of companies including Amway, Herbalife and Avon Products.
The probe into Nu Skin led the company to promise a review of operations in the country, where it got more than half its revenue in the three months to September, and postpone its full earnings release.
Shares of Utah-based Nu Skin plunged the most in more than nine years on January 17 after the government announced the probe following a report in the People's Daily, the Communist Party's mouthpiece, that the maker of skin-care and nutritional products was operating a "suspected illegal pyramid scheme".
In a letter to customers on January 21, Nu Skin said it would review employee and sales-force practices and take "corrective actions".