MLM companies have been trying to find ways around China's prohibitions, or have been developing other methods, such as direct sales, to take their products to China through retail operations. The Direct Sales Regulations limit direct selling to cosmetics, health food, sanitary products, bodybuilding equipment and kitchen utensils. And the Regulations require Chinese or foreign companies ("FIEs") who intend to engage into direct sale business in mainland China to apply for and obtain direct selling license from the Ministry of Commerce ("MOFCOM"). In 2016, there are 73 companies, including domestic and foreign companies, that have obtained the direct selling license. Some multi-level marketing sellers have circumvented this ban by establishing addresses and bank accounts in Hong Kong, where the practice is legal, while selling and recruiting on the mainland.
After earning $3,000 to $5,000 a month for a few consecutive months, Kayla quit her job in late 2016 to sell LuLaRoe full time. “The next month my profits took a dip. And the next month my profits took a dip,” she says. “I’ve not been able to recoup anything since I quit my job.” After trying to sell off as much inventory as she could, she resigned from the company last month and is awaiting her refund check—which, at the time of writing, still hasn’t arrived.
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