"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.
After Chairman Mao’s death, Ji-Li and the rest of China realize that he was never the right leader for China and instead of improving China’s society, he actually prevented it. In the end, Ji-Li knows she was brainwashed by Mao’s actions. The Communist Party told them what to wear, read, think, and how to act. They never let China be free to be who they are. It was not until Mao's death that Ji-li began questioning what they were told. “It was only after Mao’s death in 1976 that people woke up. We finally learned that the whole Cultural Revolution had been part of a power struggle at the highest levels of the Party. Our leader had taken advantage of our trust and loyalty to manipulate the whole country.” (Jiang, Chapter 18). Now, as an adult, Ji-li tries to bridge the gap between China and America. She loves the freedom she enjoys in America, especially that she does not have to worry about what she says or thinks, but she does not hate China. People can not use political corruption and injustice to get what they want out of society. Promoting equality and opportunities for all is key to improving society. We can not get behind beating people up or imprisoning them because they did not abide by society’s
Ever since the establishment of the People’s Republic of China, the legitimacy of the revolution of which it was built upon has perennially been in question. For example, in a 1999 issue of the International Herald Tribune, a prestigious scholar claimed that all of China’s tragedies are ‘sustained by a mistaken belief in the correctness of the 1949 revolution’ and that the future progress of China depends on the recognition that the revolution was a failure. However, the CCP government was certainly not perfect and its most significant failures were its political failures such as the Anti-rightist movement and the Cultural Revolution and also economic failures such as the great leap forward. Millions of peoples were falsely accused and persecuted during the political movements of the Mao period as the CCP focused on class struggle instead of economic development during the period and tens of Millions of peoples died due to starvation as there were widespread food shortages during the great leap forward movement.
Americans “thought [the] Chinese had some kind of superpower since they worked for such low wages and lived in small crowded areas” (“The Chinese Experience in 19th Century America”). The Chinese just wanted to have a better life since that was the reason they came to America and they were just working hard to achieve their American Dream of living a better life than the one in their country. They did not mind working hard for what they wanted and they did, but they were just thought of as different and as exorcists for doing this. There were Yellow Peril novels written about how the Chinese wanted to take over the American government so they could put in place their own culture. On the other hand there were groups of people who did feel the Chinese were welcomed.
For many outsiders, it might be easy to assume that all Chinese value communism, or that communism is the only thing to define Chinese politics by. However, when we watched “Born Under the Red Flag”, we could see that the Chinese views on communism are less black and white, and a little more complicated than one might think. Communism has played a big role as the main political system of China throughout its history, but not all Chinese have liked communism, just as not all have been against it. In the documentary “Born Under the Red Flag”, we can really see the reception of Communism in China, and how many have been split between those who oppose it and those who fight for it. During the rule of Chairman Mao Zedong, many of the youth became part of the infamous Red Guards, who used very violent and aggressive means to impose the teachings of Mao Zedong and communism on any person who was against it. These youth were so dedicated to Chairman Mao that they would go very far in enforcing his rule. Years later great numbers of youth in China were taking a different stance on communism, and marched in Tiananmen Square during the protests of 1989, wanting democracy instead of communism. Unfortunately this became a massacre, as the government would not give into the demands of the youth. Communism is certainly something one can come to associate China with, but even with that it can be hard to make assumptions that apply to all. To think that communism was a horrible oppressive system that did nothing but hurt the Chinese people is not completely accurate, as many loved the teachings of Communism and thought highly of Mao Zedong. But it is also not accurate to say that all Chinese people embraced communism, as it is clear that many opposed it. So the true thoughts of the Chinese on Communism, largely could depend on which Chinese person you ask, as many throughout the years
On the first board meeting, WRSX board decided not to take the market opportunity in China because of the intended strategy that was made in the strategic choices in order to create efficient local presence first . The client feedback suggests that it is too risky to develop presence in China's market. On the other hand, the feedback suggests that not entering Chinese market will lead to missed business opportunities in the country and with clients looking to create global campaigns there. By that time, the negative impact in entering Chinese market could be in terms of financial and business risk. However, the feedback suggests a positive impact for management of growth, client attraction and retention and leadership capability. The decision to create cultural change in New York, where WRSX already have an office, was taken in complementation to maintain the poor performance of the local agency in US.
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.
Huang, Quanyu, Richard S. Andrulis, and Tong Chen. A Guide to Successful Business Relations with the Chinese: Opening the Great Wall's Gate. Binghamton, NY: International Business, 1994. Web. 23 Jan. 2014.
... to keep their opinions to themselves. It would take years for them to find their voice again. Not, only did this movement silence millions, but it was also the moment for many Chinese, when the cracks in the party started to show. The man who had been revered as a god, had made a mistake, and people started to question themselves and their beliefs.
The article also give snap shot of the foreign companies who misjudge the Chinese culture, competition, size the market, and some other factors, have been badly affected by investing in china.
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.
Furthermore, the Cultural Revolution remains one of the most censored and unclear topics in China, indicating that the movement was much more impactful on the CCP’s political strategy than perhaps they would hope to admit. Simultaneously, the Cultural Revolution may also be diminishing in resonance over time, as many young people are simply unaware of the movement occurring at all, or not fully aware of its implications in Chinese
Oswaldt has two alternative actions regarding his business, bribing Chinese authorities to get licenses or not to bribe the Chinese Authorities, and both these actions may have long-term and short-term affects ánd positive and negative consequences (Hackworth & Shanks, 2007).
The American Marketing Association provides the following definition of marketing: "Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stake holders" (Kotler & Keller, 2006). Clearly, the value to the customer must first be defined by understanding the customers' needs including those that may go beyond the product or service a company is selling. For example, Safeway, a grocery store chain, goes beyond fulfilling a customer's need for groceries by addressing other needs, such as convenience, thru a door-to-door delivery of their groceries. While another company, Wal-Mart, is successful by making their products widely available to as many people as possible at the lowest possible prices. Again, the product is only part of the equation; Wal-Mart's marketing mix also focuses heavily on price and distribution (place). Finally, Microsoft now allows customers the convenience of purchasing and downloading their favorite software titles directly from Microsoft's Windows Marketplace website instead of having to travel to a retail store.
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.
Interests: China’s leaders desire to improve their nation’s economy while preserving political stability. They want to censor political discussions to prevent “westernization” of China,