As consumers boost retail spending for 2010, Amway Corp. may post a 10 percent gain in dividends as its stores in China move products such as cosmetics, vitamin supplements and kitchen utensils. China is the top market for Amway, which generated global sales of $8.4 billion last year.During an interview in Hong Kong, Eva Cheng, chairwoman, and vice president at Amway Corp.
of Amway (China) Co. indicated that sales in China rose 12 percent to $3 billion in 2009 with revenue growth this year hitting “double-digits,” .
“We’re here to create an honest income opportunity for people from all walks of life and to provide them with training. We really want to make sure that our products meet the dietary needs and habits of the Chinese people.” said Cheng.
According to a 1998 government notice, China closed the door on direct selling, saying some companies had engaged in “underground activities,” smuggling and selling fake products. The new changes greatly affected Ada, Michigan-based Amway who originally started door-to-door sales in China 15 years ago. Since 1998 the company made a comeback by refitting its business model and opening 237 shops in 197 cities.
The company pushed for the Chinese government to lift the ban and opened stores nationwide and display a greater “physical presence,” according to Cheng. Newly recruited Amway China sales associates don’t receive a commission on sales, unlike most other countries, Cheng said.
In accordance with the commerce ministry, China implemented a new direct-selling law in 2005, banning teachers, doctors and civil servants from becoming direct-sales agents and detailing the ways that sales agents can be compensated, as well as the size of sales meetings.
“China is a fairly low-trust environment, word-of-mouth becomes a big component when deciding what to buy.” said Ben Cavender, senior analyst for China Market Research Group in Shanghai.
According to China's government statistics, the country is experiencing a surge in average incomes that have risen roughly 64 percent among city dwellers over the past five years along with 58 percent in rural regions.
Over $220 million has been invested in China since Amway opened its factory in Guangzhou in 1995, it currently employs 7,000 people in addition to 160,000 direct-sales agents.
