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Direct-selling industry rises against economic downturn

By Song Jingli (
Updated: 2009-11-30 17:36

The sales revenue of the direct-selling industry on the Chinese mainland will grow more than 30 percent this year to 60 billion yuan ($8.79 billion), according to several high-ranking industry leaders attending the first session of the 14th Academic Symposium on Direct Selling in Beijing Friday.

Li Wencheng, assistant to the general manager of the New Era Health Industry Group, one of the 24 licensed direct-selling companies on the Chinese mainland, said that his company will grow by an even larger margin than the average industry growth rate.

Many participants attending the symposium consider the controversial industry, which is still under strict regulation from the Chinese government, to be a miracle at a time of economic downturn.

Andy Tsui, a postgraduate of Peking University, who studied the sales growth rate of Amway, a leading direct-selling company, and the world economy growth rates from 1971 to 2008, found that when the world economy went downturn, Amway's sales went upturn.

Huang Yonggang, general manager of New Era, attributed the sales increase of his company in the past ten months to new comers who had become jobless due to the economic crisis and turned to be direct selllers. He says that when people become unemployed they may try to find some new ways to survive and direct-selling is proving a choice for many.

According to his assistant Li, even with only 10 percent of the new direct-sellers becoming successful, they boost the company sales and also find a way to support themselves. In 2008 the sales volume increased so much, his company hired 20 new employees to do market research, website maintenance and public relations. So far this year they have hired 15 new employees.

"Direct selling can benefit the whole society and may also do great havoc to people," said Professor Chen Derfa, a direct-selling scholar in both Taiwan and the Chinese mainland, who organized the Academic Symposium.

"Most direct selling companies mainly teach and train their direct sellers how to make money and do not teach them the decent concept of direct selling and as a result, the direct sellers may run the business in a wrong way," added Chen.

While those struggling during the economic crisis may be finding a new source of income through direct-selling, some are still skeptical and see no difference between this growing phenomenon and the banned pyramid schemes.

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Wang Pu, the co-founder of the Alliance PKU Management Consultants said that a direct selling company must realize its social responsibilities by teaching and training its direct-sellers to be honest.

Chen added that this year's Symposium only accepted eight pieces of academic research papers on direct-selling from authors, most of them postgraduates, in the Chinese mainland, while last year the Symposium accepted 19 pieces of papers from authors both in the Chinese mainland and Taiwan.

He hoped more scholars could do research on direct-selling and help the public differentiate direct selling from illegal pyramid schemes, which always disguise themselves in the form of direct-selling.

The second session of the 14th Academic Symposium on direct-selling will be held on Dec 16 in Taoyuan county in Taiwan.

Direct-selling industry rises against economic downturn