Harvard Business Review article highlights how Amway reinvented its China business Leaders relied on patience, cooperation and staying true to the essence of the Amway opportunity
ADA, Mich., March 21, 2013 /PRNewswire/ -- What do you do when the government in one of your fastest growing markets determines that your company – as well as all your competitors – can no longer conduct business in that country?
In the April 2013 issue of the Harvard Business Review, Amway President Doug DeVos reflects on the company's lessons learned when the actions of an unscrupulous few forced China to ban all direct sellers 15 years ago.
In "Amway's President on Reinventing the Business to Succeed in China," DeVos describes how the company stayed true to the essence of its business, yet worked side-by-side with local officials to make significant shifts in the way it did business in that market. The goal was to rebuild trust in the company and in legitimate industry players by demonstrating long-term commitment in both words and actions.
According to the article, DeVos describes the company's reaction to the news:
The idea that direct selling could be outlawed was incomprehensible to us. This method of marketing was the foundation of Amway's business—it had been tested and proved over time and across borders. And now it appeared that we could be put out of business, despite our commitment to and investment in our China operation. When Eva Cheng, who ran Amway China at that time, called me in the middle of the night to report that the ban was likely, she advised that we not lose sight of an opportunity: We could cooperate with the government to help it understand the problems and find solutions to them. Working with the Chinese to create good direct-selling legislation would be the right thing to do for consumers, our industry, and our business.
That effort paid off when China issued Amway a new license to conduct business in 2006. Since that time, Amway sales representatives (how the company's distributors are known in China) have experienced tremendous growth in their businesses. The Greater China region consistently ranks as one of the company's top 10 markets, and in 2012, the introduction of the Amway eSpring® water treatment system in China resulted in the company's largest product launch in history. First-year sales are projected at more than $500 million.
DeVos recounts how he and Amway Chairman Steve Van Andel listened to the company's China leadership team and implemented its recommendations.
A Chinese proverb, loosely translated, says, "If you are patient in one moment of anger, you will escape a hundred days of sorrow." (Then Amway China) Eva (Cheng) was right. We could be patient. We could be cooperative. We could seek solutions to strengthen our industry and protect consumers. And we could partner with the Chinese government and our competitors to create reforms that would set the stage for our industry to grow and flourish in China.
"Our efforts in China showcase a common theme across our organization – pairing commitment to our guiding principles with an entrepreneurial pursuit of business innovation," said Amway Chairman Steve Van Andel, who also serves as vice chair of the U.S. Chamber of Commerce and chaired the organization from 2001-2002. He recently visited new sales representatives in China and noted that while change is constant, the most important thing remains the same. "What hasn't changed is the people," he told thousands of new Amway business owners. "It's the people who make Amway successful."
Amway is one of the world's largest direct selling businesses. Alticor Inc., parent company of Amway, reported global sales of USD$11.3 billion in 2012. Founded in 1959 by entrepreneurs Rich DeVos and Jay Van Andel, and based in Ada, Michigan, U.S., Amway offers consumer products and business opportunities through a network of more than 3 million distributors in more than 100 countries and territories worldwide, supported by more than 21,000 employees and a global agribusiness, manufacturing and logistics supply chain. More than 900 scientists, engineers and technical professionals work in 65 R&D and quality assurance labs worldwide to support the company's product development and create a culture of scientific excellence. Top-selling brands for Amway are NUTRILITE® vitamin, mineral and dietary supplements, ARTISTRY® skincare and colour cosmetics, and eSpring® water treatment systems. For company news, visit globalnews.amway.com.