Amway in China: a Case of Corporate and Brand Reputation

Amway in China: A Case of Corporate and Brand Reputation[1] With the turbulent regulatory environment for the direct selling industry in China, the November 2005 announcement that Amway China Co. Ltd (ACCL) had over $2 billion in sales for the second consecutive year is significant for the multilevel direct selling giant, Amway Corporation. China remains the leading market of their worldwide operations even though direct selling was banned in 1998. Their success can be attributed to responses by the corporate and local management for adapting during the ten years of business operations in China. Eva Cheng, chairwoman of Amway (China) and an executive vice-president of Amway Corporation, told a press conference in Guangzhou, “We have been told to shut down five times and to change our way of doing business four times. We depend on product quality more than our business license.” New regulations in December 2005 will pose further modifications to the Amway business model in China. “Despite the uncertainty, ACCL performed admirably,” said Steve Van Andel, Chairman of parent company Alticor. “We continue to examine our future options in China in light of the new rules, which have yet to go in effect. We are very optimistic that China will continue to be our strongest performing market.”

The Company Profile Founded in 1959, Michigan-based Amway Corporation is a large direct selling company of personal care, home care, nutrition and commercial products. It is a wholly owned subsidiary of privately-held Alticor, Inc. that operates primarily through Amway Corp; Quixtar Inc.,a North American Web-based business opportunity; and Access Business Group LLC, a product development, manufacturing and logistics provider to Amway, Quixtar and other companies. Alticor Inc. and its family of companies reported sales of $6.4 billion for the performance year ending August 31, 2005. Amway operates in more than 80 countries in Asia, Africa, Europe and the Americas. Products