"Amway" Goes Astray In China
Amway is a multi-level marketing (MLM, also known as network marketing) company founded in 1959. The company's name is an abbreviation of "American Way. Its product lines include personal care products, jewelry, dietary supplements, water purifiers, air purifiers and cosmetics as well as other products from top brands.
Amway is one of the largest international direct selling companies and entered China in 1995. Their entry into the Chinese market resulted in big profits and high potential for future growth. However, in 1998 the Chinese Government declared a ban on direct selling which threatened a substantial market for Amway. The reason the Chinese government decided to prohibit direct selling is because they believed Amway's direct-selling techniques could spread heretical religion and the start of secret societies. Chinese officials believed the ban was totally necessary because Amway's distribution and marketing policies were indicative of illegal activities.
The original intent of Amway's founders was to create a business using a novel means of product distribution that facilitates entrepreneurialism, understanding of economic management, and economic independence among its associates (i.e. distributors; the term currently in use is Independent Business Owners, or IBOs).
Amway's marketing structure is based on personal connections in order to recruit new salespeople, called distributors. These are independent agents who rely on close connections such as family, friends and co-workers as customers. To move up the hierarchical ladder, a successful agent will sell more and more products through this network of people. The circle gets bigger and bigger as one distributor is suppose to recruit others to join Amway. The pyramid and recruiting method which Amway distributors use has been branded for cultic recruitment.
The Chinese government became frightened of the potential chaos Amway's direct selling technique could cause in China. The Chinese government's concern involves Amway's system of independent networks and door to door sales techniques. Amway's emotional motivation meetings scared Chinese officials of possible social chaos.
The government's opposition toward direct-sales businesses also originated from the concern that giant mass organizations could become alternatives to China's Communist Party and could challenge loyalty to the party.
This fear may possibly be justified given the fact that Chinese society was standardized under the communist party for many years and Chinese people were already prone to become homogenous under a new concept as the one that Amway suggested.
In addition, in the Chinese society where "face" is almost everything, a business that relies on connections can be complicated.
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The first reason Americans began fearing the Communist party, is due to the party’s association with Russia and Stalinism. Russia was the most widely known Communist state in the world and the American Communist party’s adoration of it was the best-known thing about them . This became a large problem for the American Communist party when Stalin became a terrifying figure to the average American as knowledge of his atrocities and betrayals began to leak past the Iron Curtain. While most of the American Communists “just didn’t believe” these rumours, the average person did, and they did not see a difference between the American C...
Nobody went unaffected by this movement millions of Chinese citizens were alienated that were attributed with old capitalistic traditions, and aggressively united those who strictly adhered to the communist party’s policies for achieving a solidified country of socialists.
Mr. Shufu Li, Chairman of the Geely Automobile Company, of Hangzhou, China, announced in Detroit that Geely is ''... on track to enter the United States automobile market in the year 2008. Our goal is to present to the American people another choice for the family sedan, a vehicle that possesses the highest quality but is available at the lowest price,'' said Mr. Li.
A communist government is one that feeds on being the one and only power. Believing that it was competing with a powerful and ever-growing religion, the government felt threatened. They feared that the number of Falun Gong practitioners would eventually exceed the number of Party members, and once that hap...
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Finally, the 21st century defines a major devolution of the communist ideology as a mere symbol in the extreme forms of capitalist enterprise defined under the guise of “state power.” Mao had a negative impact on the Chinese economy by giving the state too much power to make decisions, which ultimately conform to neo-liberal economic ideologies that exploit the Chinese proletariat. Much like the great Leap Forward killed 45 million workers in the late 1950s, so does the current mode of economic development in an increasingly stratified class divisions centered in urban
Worden, Robert L., Andrea Matles Savada, and Ronald E. Dolan. China: A Country Study. Washington, D.C.: Federal Research Division, Library of Congress, 1988. Print.
...pective relationship as both sides will need to take information back to their team to work on a way forward. Chinese are generally risk averse but once they commit their plans tend to be long term which is not unusual when you consider how important the relationship building is prior to agreeing to do business.
...of communist ideas. Americans saw communism as the ultimate “evil” and capitalism as the ultimate “good.” And so began the second Red Scare. The Red Scare gave way to the communist witch hunts of the McCarthyism era. China had become communist after a revolution in 1949 by leader Mao Zedong who established the Peoples’ Republic of China. The “fall” of China to communism caused the U.S to become even more suspicious of people of Chinese descent as being spies out to sabotage the U.S.
Shirley Ye, Sheng, and Yan Ma. "China Vs. The United States: Market Connections And Trade Relations." International Journal Of China Marketing 2.1 (2011): 45-57. Business Source Complete. Web. 13 Dec. 2013.
Learning phase, firms started to build alliances with international respected companies, such as, possible competitors or acquisitions, absorbing the information about new technology and services, and know-how to improve their own brand. However, achieving this phase was no easy, China had its doors closed for foreign businesses for decades. They needed to train their key managers about how international companies work and manufacturing skills.
When Chinese Communist Party Chairman Mao Zedong first rose to power at the start of the Chinese Civil War, major change was on the horizon for Nationalist China. With rising inflation and civil instability at the hands of corrupt government leaders, the time had come for the Communists to take the helm in China. Mao branded this as a chance to use communist ideals to promote economic development. He believed that he could bring China to an economic level on par with its industrialized neighbors at a rapid pace, gaining him a huge following. Unfortunately for the Communist party, support for Mao hemorrhaged following the profound failures of the Great Leap Forward, an economic program he spearheaded. Mao’s plan managed to leave the agricultural industry in ruins and destroy the working population in China. Not accepting failure, once Mao had faded into near obsoleteness, he plunged back into the public eye. He claimed China was on the cusp of a dangerous return to capitalism. He called for a rebellion. Newfound support was especially common among Chinese youth, who searched for something to believe in in a relatively stagnant China. Mao’s Cultural Revolution, enabled by the rebellious youths, left the nation in a catastrophic state. It wreaked havoc on the Chinese social structure, forging class divides and resulting in a breakdown of law and order. Therefore, Chairman Mao Zedong's efforts to improve China to his own standards—the botched Great Leap Forward and the Chinese Cultural Revolution, accomplished exactly opposite of what they desired to achieve, leaving the Chinese economy and social struc...
"Marketing consists of individual and organizational activities that facilitate and expedite satisfying exchange relationships in a dynamic environment through the creation, distribution, promotion and pricing of goods, services and ideas." (Dibb et al 2001, p1)
Greenwald, B. C. N. and Kahn, J. 2009. Glob•ali•zaʹ•tion n. the irrational fear that someone in China will take your job. Hoboken, N.J.: John Wiley & Sons.