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Friday, April 24, 1998 - Page updated at 12:00 AM

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Tupperware Party's Over, Says China

Los Angeles Times

BEIJING - For now at least in China, Avon is banned from calling, Amway has lost its way, Mary Kay has been KO'd and the parties are over for Tupperware.

The four giant U.S. direct-sales companies, which have enjoyed phenomenal growth across China, were ordered this week to stop operating, under a broad new directive banning "pyramid selling."

The State Council order for all direct-sales companies to wind up operations by Oct. 31 - an order that American officials had protested in advance - came the day before U.S. Trade Representative Charlene Barshefsky arrived in China for trade talks.

And though it was not originally on the agenda for discussion, Barshefsky's team spent much of yesterday consulting with American executives and pressing Chinese officials to find a solution that will not harm the companies, which have been officially licensed and have invested millions of dollars in manufacturing and sales networks in China.

"We understand China is intent on cracking down on Ponzi and pyramid schemes and their problems," said Jay Ziegler, a U.S. trade spokesman. "But it's important to recognize that those problems have never been associated with U.S. companies operating in China."

The U.S. companies have been swept up in China's push to rid itself of schemes that have sprouted across the country and have sparked small riots when customers found that they have been duped out of their money. Among the home-grown ploys are door-to-door sales of mechanical foot massagers, cosmetics, water beds, vitamins and elixirs. Perpetrators of such scams "have been behaving badly, getting involved in underworld crimes and preying on innocent people through their superstitions," the China Daily said in a front-page story.

"We're frustrated that this sledgehammer approach gets rid of ours as well as the ones they're really trying to get rid of," said Richard Holwill, director of international relations for Amway.

Holwill said Amway has $100 million invested in China.

"I don't believe a pullout will be necessary," Holwill said.

Copyright (c) 1998 Seattle Times Company, All Rights Reserved.

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