Healthcare company Herbalife steps up presence
By Ding Qingfen (China Daily)
Updated: 2005-01-17 14:29

Herbalife, a leading US-based direct seller of healthcare products, is adding muscle to its business expansion in China by setting up its China headquarters in Shanghai, the nation's financial hub.

"Such a bold move is mainly attributed to China's potentially huge healthcare market and the gradual opening of its direct sales sector," Gregory Probert, Herbalife's chief operating officer, told China Daily.

The company will open more than 100 outlets in China this year, and add 30 new products.

"We will take every step cautiously, sticking to domestic direct-selling rules as we have done in the United States and Germany,"said Percy K. Chin, managing director of Herbalife Greater China.

Herbalife's global competitors -New York-based Avon, Michigan-based Amway and other overseas direct-selling companies - are also beefing up investment in China.

China is Avon's fastest-growing market in Asia. The company posted sales of US$157 million in China in 2003 and predicts this figure to reach US$400 million by 2007.

Amway is way ahead of Avon. Its China sales amounted to US$1.2 billion last year, accounting for 20 per cent of its global revenues. Amway plans to increase the number of its retail outlets, from the current 120, to 180 by the end of the year.

"We are still upbeat about our future prospects here because Herbalife has high-quality products and enjoys a good reputation in the global market, although they (Avon and Amway) have a large market share here," Probert said.

In 1999, the company invested US$170 million in the Chinese market, establishing a manufacturing base in Suzhou, East China's Jiangsu Province, Herbalife's second manufacturing base after the United States.

The plant became operational in 2002, and made Herbalife one of the top 50 healthcare companies in China in terms of sales volume.

Herbalife, which was founded in 1979, mainly focuses on producing nutritional food supplements used for controlling weight and aiding good health.

With 10 million salespeople and a business covering 59 countries and regions around the world, the company in 2002 registered sales revenues of more than US$2 billion, leading the global healthcare market.

"The Chinese mainland market will play a more important role in Herbalife's global development strategy when restrictions are removed, and we will make every effort to make it (the Chinese mainland market) the biggest of Herbalife's around the world," Chin said.

"The opening-up of the direct sales market gives impetus to Herbalife's expansion in China," Probert said.

China pledged to remove a ban on direct selling as part of its World Trade Organization (WTO) commitments.

However, rules governing direct selling that were supposed to come into effect on December 11 last year were not released because of minor alterations and procedural issues.

Theoretically speaking, foreign companies could have begun applying for direct-sales approval from December 11 last year, but the absence of rules have made this practically impossible.

"This (roll-out of rules) is nothing but a time problem, and the rules will surely be issued as soon as possible," said Chin.

Close