GUANGZHU, China — The government of China's third richest city issued the first ever regulations for the mail order industry earlier this month. The new law went into effect on November 1.
It establishes a government office for mail order management, which will license and regulate the city's mail order companies. Each new catalog and/or direct mail piece will have to be pre-approved.
A complaint hotline will be set up. Unlicensed or unapproved activities will be closed down. Companies entering the market will have to pay “serious” money to show good faith before receiving a license.
The regulations will make it more expensive and more difficult to enter the mail order business and will scrutinize existing companies more closely.
The city fathers have been looking at regulating local mail order businesses for the past year in order to curb growing abuse. A “take the money and run” approach has become common.
Paul Condrell, a young American who has been in the mail order business in China for a decade and now runs “Healthy Household,” a multi-title catalog company, noted that use of false company names is a frequent scam.
Other companies put photographs and descriptions of high quality products into their catalogs and then shipped home-made imitations which often didn't look like the picture in the book.
Wildly misleading claims in advertising copy, he said, had become rampant; so had mismanagement, lost orders, non-processing of returns and other abuses that had tarnished the industry's image and made it hard for good companies to attract and keep new customers.
Controls may be repugnant in other markets, Condrell said, but the Guangzhou government had planned carefully and drafted the regulations in consultation with local mail order companies and the city's postmaster.
“These regulations are significant,” he noted, “because they show that one Chinese government recognizes the value of direct mail, and has moved to curb abuses that hurt both consumers and legitimate companies.”
Although the new regulations apply only to companies registered in Guangzhou, Condrell predicted they will be watched closely across the country and influence national regulations which he believes are still several years off.