Opportunities and Challenges for Direct Selling Operations in China
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Transcript of Opportunities and Challenges for Direct Selling Operations in China
Opportunities and Challengesfor
Direct Selling Operationsin China
Harry Yeung
Caring International (Hong Kong) Ltd.
September 30, 2003
Since 1888
Third & Fourth Generation
Founder
Second Generation
Nanshui, Zhuhai, 1888
Headquarter: Hong Kong
Business of LKK Group
HealthBusiness
SauceBusiness
Health Business
- LKK Health Products Group
- Caring International
- Guangdong Nanfang Lee Kum Kee
Guangdong Nanfang Lee Kum Kee
• Approved as direct selling company in
1996
• Stopped direct selling in 1998
• Adapted wholesaling and retailing in
1998
History of Direct Selling in China – (1)
Late 80’s Direct selling started
1995 Ban of direct selling
1996 Reopen direct selling & approved 41 companies
History of Direct Selling in China – (2)
1998 Ban of direct selling
1998 Conversion regulations & approved 10 companies with new operation model
Opportunities – (1)
- Drafting of direct selling legislation is
underway to fulfill China’s WTO
commitment on sales away from a fixed
location
Opportunities – (2)
- One of the world’s fastest growing
economies
- GDP grew from approximately
RMB7.8 trillion in 1998 to reach
RMB10.3 trillion in 2002,
representing a CAGR of 7.3%
Opportunities – (3)
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1992 1993 1994 1995 1996 1997 1998 1999 2000 20010
10
20
30
40
Population
Urbanisation rate
Po
pu
latio
n (
bill
ion
)
Urb
an
isa
tion
ra
te (
%)
Source: China Statistical Yearbook 2002
Opportunities – (4)
- A sizeable affluent group• better education
• possess credit card / mobile phone / digital
camera
• international travelling
• care for health and beauty
• willing to take up learning and money-making
opportunities
Opportunities – (5)
- Social and political stable
- Expanding elderly population
- Many entrepreneurs
Challenges – (1)
- Future direct selling legislation will be
drafted according to China’s
characteristics
Challenges – (2)
- Poor social image due to confusion
with “Chuan Xiao”
Challenges – (3)
- Entry barriers• set up own manufacturing plant
• guaranteed deposit
• overseas distributors were not allowed
Challenges – (4)
- Business regulations keep changing
Challenges – (5)
- Severe competition anticipated
- Ineffective self-discipline
Tips for Survival
• Live in China, among Chinese
• Localization of employees
• Learn by mistakes
• Manage external variables carefully
Tips for Sustaining
• Strengthen government relations
• Be flexible and proactive in making
changes
Thank You !Thank You !