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Foreign firms show way in direct selling

By Yao Jing | China Daily | Updated: 2013-10-03 09:43

Foreign firms show way in direct selling

The Nu Skin lifestyle store in Beijing. Provided to China Daily

Mary Kay, Nu Skin, Amway gained solid ground in China's marketplace

Rumors about direct selling have never disappeared since the marketing form sneaked into China 20 years ago. Meanwhile, industry has been struggling to jump on track. Right now, it is burgeoning in the laggard marketplace, led by foreign branded companies.

"The direct-selling industry in China is growing at more than 20 percent year-on-year. It is predicted to keep increasing to hit 1 trillion yuan ($163.4 trillion) in less than 10 years," said Hu Yuanjiang, secretary-general of the Direct Selling Expert Committee of the China Marketing Association.

The Chinese direct selling industry totaled 169.68 billion yuan in 2012, up from a breakthrough of 100 billion yuan in 2009, according to a report released during the Asia-Pacific Direct Selling Forum, which was held in June in Hainan province.

In order to provide an operational environment for industry players, as cheating and illegality were always connected with direct selling at the initial stage, the central government issued Regulations on Administration of Direct Sales in 2005. Right now, nearly 40 players have got an official license, and an increasing number of companies are waiting to be approved.

"Currently, foreign companies are sharing a big slice of the market because they have richer research and development capabilities, more cash flows, better management experience and have established recognizable brands in developed markets," said Hu.

Among those forerunners, Mary Kay, Nu Skin, Amway, and other foreign companies have gained solid ground in the marketplace and keep revamping market strategies to maintain their competitive edge.

As for Nu Skin Enterprises, a United States-based direct-selling company, its revenue in Greater China amounted to $269.1 million in the second quarter of 2013, up 35 percent compared with the same period last year.

"Mirroring our total global revenue of $682.9 million in the second quarter, I think China is playing a bigger role in our company's global expansion," said Andrew Fan, regional president of Nu Skin Greater China.

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. Later this year, its Greater China Innovation Park will be opened, and this is also the company's biggest overseas investment till then.

"This shows our determination in further exploring the Chinese market," said Fan.

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