The Study of Management Strategies for Managing Direct Selling usiness in China - The Case Studies of Amway and Avon in China

The development of Direct Selling industry in China is amazingly flourishing since Avon set foot in GuangDong, China at 1992. Giving China’s potential mega size market, the growth pattern of the industry is not all very positive in the past 30 years. Chinese government has issued a total shut down upon all those Direct Selling business in 1998 to prevent the deterioration of the social distress caused by the not yet completed governing system. All the existing multi-national direct selling company were “advised” to transform from “No-Shop” Sales to “Direct-owned” or “dealer-owned” store operation. Not until Chinese government honored the WTO treaty in 2005 and embraced the development of private own retail business, the permission of No-Shop sales were then reissued. However, the well known multi-level marketing/compensation system of Direct Selling system was still banned in China. The Direct Selling system are mainly differentiated from traditional retailing system by its different selling channel, no-shop sales, single or multiple compensation system, and their high percentage motivation bonus system. What were the challenges the management team of the multinational direct selling companies facing? How can these companies survive the highly volatile legal environment and still be thriving 30 years after? What were the strategies adopted to cope with the external change? What were the consequences after these new strategies had implemented? The author has chosen the largest global Direct Selling Corporation-Avon and the largest International Direct Selling Corporation operate in China -Amway as subjects of this study and tried to determine what were the strategies these companies adopted that lead to success. The result of study found that the common strategies toward emergency lead to success are as follows: 1. Obey and cooperate with Chinese government's decree 2. Keep the communication channel with government open at all cost 3. Maintain good public image, advocate social well-beings by contributions 4. Ultra-flexible organization