Amway wants it their way

China Daily/November 10, 2003

Amway, a leading global manufacturer of cleaning products, cosmetics and nutritional supplements, hopes China will lift the ban on direct sales so as to facilitate its business in the country.

Douglas L. DeVos, president of Alticor Inc, the parent company of Amway, yesterday said they are still waiting for the government's new regulations on direct sales, before making a decision on whether to adopt a different marketing approach in China.

China imposed a ban on direct sales in the country in 1998, saying it is hard to differentiate direct sales from so called "pyramid sales," which had led to widespread fraud, consumer losses and social disorder.

The ban has battered Amway hard in China, which relies on direct sales to do business everywhere else in the world. The revenue of the company in China plummeted from 1.5 billion yuan (US$181 million) in 1997 to a meagre 320 million yuan (US$38.7 million) in 1998.

Facing the crisis, Amway decided to sell its goods through retail outlets and "non-employee" sales representatives who promote products door-to-door.

The transition has been successful. The Chinese market now becomes Amway's largest market in the world, with revenue in China reaching US$1 billion last year.

Still, Amway has not given up on its efforts to convince the government to lift the ban on direct sales. It believes that direct sales, as employed by the company in other countries, can substantially reduce costs.

DeVos said it is still too early to determine whether it will make substantial changes in its current sales mode here, and that it will have to wait until the government announces the new regulations before making any final decision.

DeVos was in Beijing to attend an international charity seminar.

DeVos yesterday also briefed reporters on his testimony on October 31 to the US Congress on US-China commercial relations. The United States has been blaming its sluggish economic performance to China's manipulation of its currency to boost exports and thus damage the interests of US companies.

"Certainly, when there are economic difficulties, the natural thing to do is to point fingers at other parts of the world, and try to blame them," said DeVos.

"Let's not do that. Let's understand we are part of the global economy."