Foreign firms show way in direct selling (3)

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The lifestyle store of Nu Skin in Beijing. Entering the Chinese market in 2003, Nu Skin has established five manufacturing plants, two R&D centers, as well as 48 boutiques and stores, with an investment of 3 billion yuan up to the end of 2012. Provided to China Daily

Amway has also witnessed Chinese consumers' path of increasing understanding about direct selling in the past 18 years.

"Amway China reached a total turnover of 27.1 billion yuan in 2012, which accounted for one-third of the company's global revenue," said Yu Fang, vice-president of Public Affairs, Amway (China) Co Ltd.

The player invested 600 million yuan in building its first global planting research and development center in Wuxi, focusing on organic planting technology, herbal medicine healthcare products and cosmetics, as well as the second phase of its factory in Guangzhou, which will mainly expand the manufacture of its flagship brand, Nutrilite.

Although Yu is confident with its consulting marketing strategy in the way of face-to-face, one-to-one tailored service, she is worried about hurdles in managing and leading its sales team as they are scattered and floating.

"Amway needs to attract more talents to enhance customers' consumption experience, promote digital applications, and generate creative strategies," said Yu.

In general, direct-selling companies have been struggling to shed a bad impression as a messy market and a less convinced marketing strategy among Chinese consumers.

Direct selling represented only 1 percent of total retailing value in China in 2012, the third smallest among all channels, only bigger than vending and homeshopping in value terms, according to Direct Selling in China released by Euromonitor International.

"In fact, direct selling is just another way of marketing and we are faced with the same customers and brand-building challenge as our retailing competitors," said Mak of Mary Kay.

In Mak's opinion, in recent years, the direct-selling industry has been running faster than retailing business overall in the background of the sluggish global economy, especially in developed markets. Faced with rising unemployment, people tend to be more prudent in shopping in retailing, he said.

"However, the decreasing economy always pushes more people into a direct selling career, and with increasing salespeople, the performance of our products are also being promoted," said Mak.

Of course, he said with the booming of the industry, more local players are betting on the business and the number of local direct selling companies has surpassed 40 percent of the total number.

"Local companies are growing very fast. But the story of increasing competitors has also added the homogenization of the industry in terms of brand building, marketing and product strategies," said Yu Fang from Amway.

Still, as a young industry of just more than 20 years, Hu, from the association, said the further development of direct selling depends on the further improvement of the legal and regulating system to bring it in line with the global direct-selling market.

"As for salespeople and companies, they have to develop a career based on products and services, not playing with opportunities and investments," said Hu.

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