(Yicai Global) Feb. 15 -- Chinese regulators have halted approvals of new direct selling licenses until the commerce ministry has rectified the sector with relevant parties. The move follows pyramid scheme claims regarding two Chinese healthcare-oriented firms. 

The Ministry of Commerce is actively working with relevant departments to investigate, regulate and strengthen monitoring of the direct selling market while violators will be punished, spokesperson Gao Feng said at the regular press conference yesterday.

Two names top the list of firms which use person-to-person marketing methods and have the most consumer complaints, according to a report the country's former antitrust regulator released in April 2018. Hebei province-based Hualin Group gathered 33 votes in 2017 while Tianjin's Quanjian Group came second with 16 cases. 

Hualin, which that sells massage machines and health care supplements, has been accused of a pyramid scheme that has pushed resellers to advertise devices with unfounded medical grounds. Police detained senior managers of the  firm last month as the investigation began. Hualin's revenues were CNY3.9 billion (USD575.3 million) in 2017, according to data from direct selling site DSDOD. 

On Jan. 13, the Wuqing District Procuratorate in Tianjin approved the request from the bureau of public security to arrest 16 suspects from Quanjian Natural Medicine Science & Technology Development, a unit of Quanjian Group which delayed a four-year-old Chinese girl's chemotherapy treatment to the outcome of her death in December 2015. 

Editor: Emmi Laine