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To Enhance Its Struggling Business In China, Technology Is The Bet For Amway

To Enhance Its Struggling Business In China, Technology Is The Bet For Amway
Over the past three years, sale sales been falling steadily for the global direct-selling company Amway Inc in China, to mitigate this robe and to spruce its sale channels, the company plans to resort to technology.   
The company plans to install technology based sale channels such as online ordering platform for its agents and experience centers, as it looks to rebuild its business in China.
Trough the representation of about 30 percent of the company’s $8.8 billion in total sales last year, China remains the biggest global market for the Michigan-based firm even after two decades of entering the country. But from nearly $4 billion in 2013, China revenue reached 17.7 billion yuan ($2.57 billion) in 2016 and this is evidence enough of the huge contraction in its revenues from the second largest economy in the world.
"We're struggling a bit here now," Doug DeVos, Amway's president, told Reuters in an interview late Tuesday in Beijing.
With more than 90 direct selling companies now operating in the country, its China business faced growing competition and was suffering from "a direct selling cycle", DeVos said.
According to market researcher Euromonitor, with the retail sales value, excluding sales tax, reaching 135.8 billion yuan in 2016, China's direct sales market has doubled in size over the last five years.
While Amway's permanent workforce has declined slightly to 8,000, its active sales force has contracted by about half over the past three years to 160,000 agents. The company now operates 250 stores nationwide that are significantly lower than earlier.
DeVos said that to make improvements for its sales force in China, Amway is turning to the Internet to revive its business. While converting stores into so-called "experience centers" designed as both showrooms and clubhouses, the company is allowing agents to use an online platform to order and re-order products.
Online sale has significantly increased in recent years. Amway Greater China president Gan Chee Eng said five years ago, Chinese consumers did about 10 percent of their shopping online about five years ago, now about 50 percent of all China sales are made online.
From a year ago, its total revenue in 2016 was down 7 percent, Amway said last month. Representing about two-thirds of total sales, the company's most important region remains Asia-Pacific which also includes Japan and South Korea. Profitability is not disclosed by the privately-held company.
DeVos said that China is expected to remain the company's biggest market for some time.
"China is going to have new markets (internally) for some time," said DeVos. "We're going to work through the current situation, because we have some history with it, and we're going to find our way back."

Christopher J. Mitchell

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