Amway in China: factory in Guangzhou

We have always thought that the only major center of operations for Amway was in the U.S., where it started. Well, not anymore! In 1993, Amway (China) Co., Limited was established and Ms. Eva Cheng, an elegant results-oriented woman, is at the helm. We met the newly promoted Regional President (he got his promotion the day before we had the interview), the western educated Mr. Gan Chee Eng, who is concurrently the Chief Marketing Officer of Amway China.

According to Mr. Gan, China is Amway’s biggest market, comprising about 30% of its global sales. Hence, Amway thus far has invested about US$225 million in China, with two major bases: the factory complex and the logistics center in Guangzhou, and the research center in Shanghai. Amway China has now captured about 50% of the country’s direct selling market, with 600,000 active sales representatives, meaning those who receive commission/bonus on sales. Others join just to buy the products at discounted rates. However, brand building is still to be fully established – a continuing challenge, according to Mr. Gan. Direct tv shopping is getting popular, as well as internet purchases. Amway’s advantages in these areas are the presence of its sales reps and the efficiency of its product distribution, so customers are served right away.

Amway, turning 50 this year 2009, is in 80 countries/regions around the world, employing 3 million people. The Guangzhou factory, built in 1992 – 94, started operations in January 1995 with just two product lines. It now has 31 finishing product lines at its site of 141,000sq. meters, with four major product areas: 1) home, 2) personal care, 3) cosmetics, and 4) nutrition. It is the largest outside of the U.S., generating revenues of about US$4 billion, mainly serving the needs of China and some countries of Southeast Asia -- Hong Kong, Taiwan, Korea, Indonesia and the Philippines.

Its Quality Management aspires for ISO 9001 accreditation, adhering to strong requirements to protect the environment by recycling water, recycling heat from condensation and maintaining an eco-friendly workplace. They are also strict on rules regarding occupational health and safety. They are proud of their award as a Garden Factory, “an ecologically friendly venue to work in.”

“We are always looking for products, what the consumer needs,” explained Mr. Gan. “We are open to intellectual property sharing (on research & development) 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 website in China. Amway is a sponsor of expeditions to the north and south poles to get public awareness on the ecological problems. ”

On the global economic downturn, Mr. Gan has this to say: “Amway is a private company, not publicly listed in the stock market. For Amway China, we don’t have loans. 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.”