Page 278 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
that the group was running a pyramid scheme collaborative law enforcement activities. In terms
and exaggerated advertisements that may have of law enforcement and handling cases, a total
attributed to the death of a young girl. The of 21,152 cases were filed nationwide, with a
exposure of questionable practices by Quanjian case value of 13.020 billion yuan. There were
and other direct selling companies have raised a 9,505 cases closed, and 664 million yuan in fines.
public outcry over the vast but under-regulated A total of 446 cases were transferred to judicial
industry (Jia). organizations (DSN).
China’s State Administration for Market Retail
Regulation (SAMR) and the Ministry of Commerce
summoned all 91 direct-selling firms operating in Chinese consumers are willing to embrace
China to an early 2019 meeting as part of the “100- changes, they are also constantly changing
day operation” to clean up the health food market. and becoming more discerning. In particular,
The direct- selling industry was especially hard consumers born in the 1980s and 1990s will prefer
hit by the operation. The businesses were told to entertaining and practical shopping experiences,
self-examine its production process, information instead of simply combining the in-store experience
made available in the product labelling and with a digital app. In 2018, 52 percent of Chinese
dosage information, sales, internal management, consumers spent more on experiences, such as
and direct selling agents. They were also told to travel, dining out and activities, than the previous
stop making false claims about their products. year, compared with 26 percent in the United
The regulator pointed out that “the number of States (Ouyang).
unlawful practices had come along with the rapid
development of the direct sale industry, which In 2018, the nation’s total retail sales of
could bring about dire consequences. They were consumer goods reached roughly US$5.86 trillion.
also warned to expect random inspections. Some In 2019, the government launched relevant policies
of the brands are well known in China including to stimulate consumption for the automobile and
established brands from America; however, home appliance sectors, whose sales slowdown
concerns were raised over the activities of some in 2018 dragged the growth of total retail sales
other players in the space. Guangdong is the most of consumer goods. Consumption upgrade is
popular with direct selling health products, with an inevitable trend in China. Online and offline
14 direct selling firms approved to operate in the retail sales will develop synchronously, offering
province (Koe). a better consumer experience (Zheng, Retail
Sales). “In recent years, consumers in China have
China’s 100-day action crackdown on illegal experienced rising incomes, catapulting millions
practices in the health products market ended into the new middle class,” said Monica Peart,
in May 2019, including those by direct selling senior forecasting director at eMarketer. “The
companies. The findings were staggering. The result has been marked rise in purchasing power
number of direct selling products involved in the and average spending per person.” E-commerce
revocation was 49; 54 food business licenses were is a major driver of China’s retail economy,
revoked; 90 business licenses were revoked; and accounting for almost one fifth of the country’s
465 counterfeit and fake dens were destroyed. total retail sales in 2018. On China’s annual
Over 2.7 million law enforcement personnel were shopping holiday, Singles Day, 2018, E-commerce
dispatched throughout the country to supervise giant Alibaba scooped over US$1.47 billion in just
and inspect key industries, key areas and key two minutes. Its 24-hour sales amounted to a
commodities. Among them, 282,000 people in record of US$31.46 billion, exceeding that of Cyber
densely populated areas such as communities, Monday and Black Friday combined. By the end of
parks, and plazas were inspected, and key places 2019, China had 55.8 percent of all online retail
such as hotels were inspected. In addition, 731,000 sales globally, with that figure expected to exceed
“health” stores were inspected. Conducted 63 percent by 2022 (Xinhua, China to Become).
64,000 administrative and administrative
interviews; 191,000 publicity activities; and 42,000
278
that the group was running a pyramid scheme collaborative law enforcement activities. In terms
and exaggerated advertisements that may have of law enforcement and handling cases, a total
attributed to the death of a young girl. The of 21,152 cases were filed nationwide, with a
exposure of questionable practices by Quanjian case value of 13.020 billion yuan. There were
and other direct selling companies have raised a 9,505 cases closed, and 664 million yuan in fines.
public outcry over the vast but under-regulated A total of 446 cases were transferred to judicial
industry (Jia). organizations (DSN).
China’s State Administration for Market Retail
Regulation (SAMR) and the Ministry of Commerce
summoned all 91 direct-selling firms operating in Chinese consumers are willing to embrace
China to an early 2019 meeting as part of the “100- changes, they are also constantly changing
day operation” to clean up the health food market. and becoming more discerning. In particular,
The direct- selling industry was especially hard consumers born in the 1980s and 1990s will prefer
hit by the operation. The businesses were told to entertaining and practical shopping experiences,
self-examine its production process, information instead of simply combining the in-store experience
made available in the product labelling and with a digital app. In 2018, 52 percent of Chinese
dosage information, sales, internal management, consumers spent more on experiences, such as
and direct selling agents. They were also told to travel, dining out and activities, than the previous
stop making false claims about their products. year, compared with 26 percent in the United
The regulator pointed out that “the number of States (Ouyang).
unlawful practices had come along with the rapid
development of the direct sale industry, which In 2018, the nation’s total retail sales of
could bring about dire consequences. They were consumer goods reached roughly US$5.86 trillion.
also warned to expect random inspections. Some In 2019, the government launched relevant policies
of the brands are well known in China including to stimulate consumption for the automobile and
established brands from America; however, home appliance sectors, whose sales slowdown
concerns were raised over the activities of some in 2018 dragged the growth of total retail sales
other players in the space. Guangdong is the most of consumer goods. Consumption upgrade is
popular with direct selling health products, with an inevitable trend in China. Online and offline
14 direct selling firms approved to operate in the retail sales will develop synchronously, offering
province (Koe). a better consumer experience (Zheng, Retail
Sales). “In recent years, consumers in China have
China’s 100-day action crackdown on illegal experienced rising incomes, catapulting millions
practices in the health products market ended into the new middle class,” said Monica Peart,
in May 2019, including those by direct selling senior forecasting director at eMarketer. “The
companies. The findings were staggering. The result has been marked rise in purchasing power
number of direct selling products involved in the and average spending per person.” E-commerce
revocation was 49; 54 food business licenses were is a major driver of China’s retail economy,
revoked; 90 business licenses were revoked; and accounting for almost one fifth of the country’s
465 counterfeit and fake dens were destroyed. total retail sales in 2018. On China’s annual
Over 2.7 million law enforcement personnel were shopping holiday, Singles Day, 2018, E-commerce
dispatched throughout the country to supervise giant Alibaba scooped over US$1.47 billion in just
and inspect key industries, key areas and key two minutes. Its 24-hour sales amounted to a
commodities. Among them, 282,000 people in record of US$31.46 billion, exceeding that of Cyber
densely populated areas such as communities, Monday and Black Friday combined. By the end of
parks, and plazas were inspected, and key places 2019, China had 55.8 percent of all online retail
such as hotels were inspected. In addition, 731,000 sales globally, with that figure expected to exceed
“health” stores were inspected. Conducted 63 percent by 2022 (Xinhua, China to Become).
64,000 administrative and administrative
interviews; 191,000 publicity activities; and 42,000
278
