Money
May 14, 2009
The Year of the Ox signifies more than the usual celebrations for Amway Corp., perhaps the most successful multi-level marketing company in the world, as 2009 marks half a century of product distribution through direct selling. What started out as a basement business selling health supplements in 1959 is now a multi-billion dollar company, employing three million people in 80 countries/region around the globe. It carries five major product areas under its wings including personal and home care, food supplement, cosmetics and cooking wares and has captured a big market interest even in the most traditional countries like China.
On a recent tour of Guangzhou where Amway houses its biggest factory outside of the US and Shanghai, the center of Amway’s research and development, the company opens its door for select Filipino and Taiwanese journalists to share some secrets of its success in the land of emerging superpower China. Amway, after all, has its history connected to this country because this is where Charles Rehnborg, developer of Nutrilite Dietary Supplements, Amway’s first product, started the idea and first conducted his research for this nutritional pills.
Capturing the Chinese market
China is Amway’s biggest market so far, beating Europe and America for a total of 30-percent share of the global sales while on the local direct selling front, Amway has 50 percent of the total industry.
Gan Chee Eng, regional president and chief marketing officer of Amway China, attributes this success in their strategy of adapting to the Chinese market and communicating with the local culture. As a result, Amway China has 90-percent favorability in terms of brand awareness and is raking more than $4 billion in annual sales. This impressive performance allows the company to further develop its resources and continuously update its state-of-the-art research and development facilities.
“We are always looking for products, what the consumer needs. We are open to intellectual property sharing with the Philippines. Our focus worldwide is on environment-friendly child, health and beauty products. Our cookware requires less energy to cook; our homecare products are recyclable and biodegradable. Amway China employees and distributors are active in Greenway, an environment Web site in China,” Gan adds.
Built from 1992-1994, the 141,000-square-meter Guangzhou factory complex and logistics centers carries up to 25 truckloads of products every day for distribution in Southeast Asian countries like Taiwan, Indonesia, Hong Kong and Korea. The Guangzhou factory, which cost around 500 million renminbi in construction, is kept at 22 degrees temperature all year round to maintain the highest quality of its products and adhere to global standards. These strict compliances earned Amway China’s facilities ISO 9002, Hazard Analysis and Critical Control Points and Good Manufacturing Practices certifications. They also have ISO14001 for Environmental Management Standard, and OHSAS 18001 Occupational Health and Safety.
“Our products are melamine-free. We do our own lab tests on materials before using them. We have that capability. Presently, we are not exporting any products abroad. We have earned the trust of the public and we have gained the confidence of the market,” the well versed, newly appointed regional president assured the writers.
Meanwhile it’s Shanghai office, which also houses its Research and Development center in One Corporate Avenue, 222 Hu Bin Road, which costs a monthly rental $2 million, is another testament of the company’s strong foothold in the direct-selling industry. According to Amway’s officials, the sales from its 13 shops in Shanghai alone are more than enough to cover rental fees.
In terms of taking care of its people, Amway China has stepped up to further the benefits that its distributors get from the company. Last year, Amway has posted an annual sale of $8.2 billion and a big chunk of it went to its distributors as commissions and bonuses.
“We have increased our bonus packages for our sales representatives, as well as increased our budget for the construction of new buildings and for investments in research and development. We therefore have the confidence and trust of our numerous sales representatives. We have brand building in place for 2009,” ends Gan.
Success in technology mining
Speaking briefly on Amway’s R&D undertakings, director Jia Chen emphasized on the company’s commitment on technology mining and innovation as its main vehicles in producing their top-selling products especially in beauty and health category like Nutralite and Artistry. Their team consists of professionals who have attained master’s degree from prestigious universities all over the world and a scientific board who regularly monitors the results of each and every experiment and study undertaken by the R&D team.
“It all depend on technology mining but tech mining can’t be built in one day. It takes a long way to research and collaborate with other organizations. Our R&D is focused on the Chinese market. In Amway China, we have a lot of ideas but we have to innovate, we eliminate bad ideas as well.”
Amway is concentrating on the direction of optimal health and healthy aging rather than the temporary solutions offered by other products in the same category. They are ahead on using organic components harvested mainly from four organic farms that Amway maintains in different parts of the world, California and Washington, Central Brazil and Jalisto in Central Mexico. These farms use seawater for the soil to integrate minerals that are more useful in the end products.
Chen cites Artistry’s Crème L/X, which is endorsed by no other than top Hollywood celebrity Sandra Bullock who swears on endorsing products that she only trusts. Crème L/X active formula primarily targets the mitochondria, considered as the engine of the cell, to restore or increase cell energy, which results in visibly younger-looking skin.
“We focus on health and beauty, we do both product lines. Skincare is the first part of it but we have other products [to go with it] that we encourage people to take as well so in the end they will have optimal health,” says Chen.
Strong in the Philippines
In the Philippines, Amway’s biggest selling brand is Nutrilite, which puts in 45 percent of its business last year while 15 percent is contributed to its skincare and cosmetic line, Artistry. Aside from these main lines, they also offer a wide variety of home care and personal care products.
In Makati, Amway has its own Brand Experience Center where people can have a firsthand experience of its products while in Visayas and Mindanao, they offer organically complex agricultural products which also help the farmers to increase their harvest.
Amway Philippines is one of the first in the direct-selling business locally, started in 1997 with a vision to enable Filipinos to live better lives. Today, it has over 40,000 independent business owners who are continuously promoting entrepreneurship among Filipinos while benefiting financially from their endeavors.
They also participated in Amway’s social responsibility efforts and lend a helping hand to those who are in need. In 2004, Amway Philippines launched the One for One Campaign for Children which is aimed at children’s right and literacy. Among their projects are regular story telling sessions inside the library of F. Benitez Elementary School in Makati and renovation of the library in South City Central School in Cagayan de Oro where they also donated story books. This year, the plan to partner with the Department of Education in expanding their campaign in Cebu City is also pushing through.
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