You may have heard this before: Many marketing gurus have professed, with a sound strategy and attitude, it is possible to sell refrigerators to Eskimos.

The folks at Los Angeles-based Herbalife International of America apparently agree. Their strategy is direct selling, and their attitude, well, positive. And the New York Stock Exchange-listed marketing specialist, with annual sales in excess of US$2 billion, is gearing up to sell a range of Chinese herbal health supplements in, you guessed it, China.

Spearheading the company's sales efforts in the "motherland of herbal drugs" are two former executives of Disney, a doyen of global marketing and brand building. The executives are Gregory Probert, chief operating officer, and Paul Noack, senior vice-president.

Interviewed in Beijing last week, Probert said the company's success in Taiwan and Japan, the firm's two largest markets in Asia, which account for about one-third of its global sales, has given him the confidence the company will penetrate the Chinese mainland market, which is already flooded with herbal-based health supplements for treating all kinds of ailments.

"What we are waiting for is the lifting of the ban on direct selling in China," Probert said.

That ban was imposed in 1998, in the wake of several scandals that arose from "pyramid-selling" schemes that hijacked the direct selling model and turned it into money-swindling machines that cheated thousands of people out of their savings.

Since then, the Chinese Government has drafted new regulations on direct selling. The government, in late 2004, also agreed to lift the ban as part of its commitment to the World Trade Organization (WT0). The opening of direct selling has been delayed due to what one official described as "procedural problems."

Meanwhile, some foreign direct-selling companies, including numerous leading cosmetics vendors, have circumvented the ban with modified marketing models for the Chinese mainland.

For instance, Amway, one of the world's largest direct sellers of household products, grossed US$1.2 billion in sales in China in 2003. That amounted to 20 per cent of the company's global revenues.

So far, Herbalife has largely avoided the Chinese mainland market because, as Probert explained, "we believe direct selling, pure and simple, is the best way to sell healthcare products. There is a need for our sales people to gain a good understanding of the needs of their customers in order for them to recommend the most suitable items from our list of products."

But, in the past year or so, the company has been preparing to enter the Chinese mainland, in anticipation of the lifting of the ban. It has recently established its China headquarters, in Shanghai, and completed a manufacturing plant in Suzhou, in East China's Jiangsu Province.

Probert said the plant has the capacity to manufacture products to meet expected demand on the mainland, and to export products. What's more, the factory also has the ability to research and develop products specifically for the Chinese mainland, he said.

"We are optimistic the ban (on direct selling) will be lifted soon," said Noack.

"We have studied the framework of the new regulations, and we are encouraged by the fact the authorities are committed to establishing a level playing field for all participants in the business."

His confidence is shared by executives of many other foreign direct selling companies, which chose Beijing for their annual global conference. The event was held two weeks ago.

"We are all very enthusiastic about the prospects of expanding our businesses in China," Noack said.

The potential of the mainland's market for direct selling companies is understandably large. There is also a growing number of entrepreneurs, in the major cities, and rural districts, who are keen to join the sales teams, which promise good incomes, flexible work hours and the opportunity to start a business with low initial outlay of capital.

These are the factors behind Herbalife's success in Mexico and Brazil, which are the company's largest markets outside the United States. In those countries, there are numerous under-employed workers who are looking for opportunities to make some addition money to supplement their regular incomes, Probert said.

Such a pool of motivated sales people is essential to the development of direct selling in any market, he added.

There is obviously an ample supply of people on the Chinese mainland long on entrepreneurship, but short on capital. But other factors chiefly, the products themselves count too.

Nobody doubts the strong demand for herbal health supplements on the Chinese mainland. A large number of advertisements on television push one product or another that is supposed to enhance a person's brain power of physical prowess. One common thread is they all claim to be derived from some traditional Chinese herbal mix that is believed to have an almost magical effect on the human body.

Herbalife believes it has a better way of selling. "We don't advertise that much, and our products are never sold in drugstores or supermarkets in any market," Probert said. "Our direct selling model works for us in other markets, and it should work for us in China."

One of the company's best-selling lines is what Probert describes as its "weight-management" products. But the sales emphasis is not on weight loss, which, Probert says, seems to have a less-than-healthy connotation.

"Our emphasis is on nutrition," he said. "Our products are nutritious without weight gain." Such an emphasis goes back to the origin of the company, which was founded in 1979 by a young US resident whose mother died from the misuse of diet drugs.

The firm's first product was a protean enrichment drink derived from soybean. Since then, the company has developed a range of health supplements for both internal and external use.

In the absence of concrete scientific proof, the effectiveness of health supplements of any brand has often been questioned. Herbalife has invited a group of physicians and scientists, including at least one Nobel laureate, to join its board of advisers to lend credibility to its products.

Our customers will be the best proof, Probert says.

"We have 30 million satisfied customers around the world," he said.

(Business Weekly 01/26/2005 page11)