英语市场调研报告之亚洲商务研究-关于玫凯琳公司在中国上海的营销策略分析

发布时间:2011-06-22 14:51:12 论文编辑:第一代写网

A foot in the door
asian Business
Copyright UMI Company 1997. All Rights Reserved. Copyright Far East Trade Press Ltd. Jan 1997
The direct sales industry in China is booming, grabbing the interest of multinationals and entrepreneurs. But, writes Lily Tung, its success has alarmed the government, which is likely to rein in its prolific growth with further legislation
英语市场调研报告Since Avon arrived in Guangzhou in 1988 and introduced direct sales to China in the form of cosmetics, small gifts and ornaments, Chinese and foreign companies have been scrambling for a slice of the action.
The first companies registered in China sold everything from fake diamonds to 'miraculous' AIDS-curing medicines. But along with a rise in consumer fraud, direct sales began to garner public notoriety and, ultimately, government attention.
In October 1995, the China Administration of Industry and Commerce (AIC) stipulated that all companies had to undergo a review before their licences would be reapproved, and new applications would not be considered.
The AIC categorised companies into multi-level marketing (MLM) and singlelevel direct sales (SLDS). Single-level direct sellers, or distributors, earn commission from the parent organisation for their own sales, but cannot exact commission from sales people they recruit. MLM distributors, on the other hand, can recruit sales people and take a cut from their sales.
Of the 173 companies that existed in China at the end of 1995, only three SLMs and 41 MLMs were granted licences after February 1996.
Approval was based on the size of investment, organisational structure, products, refund policy and manufacturing base - companies were required to have a factory in China and an investment of at least Rmb5 million (US$609,000).
The big four
There are four direct sales multinational companies operating in China: Amway, Mary Kay, Sara Lee and Avon.
Cosmetics giant Avon, Shanghai Lezhi Domestic Electrical Equipment - which markets vacuum cleaners - and Mary Kay all operate in Shanghai.
/Mary Kay set up its headquarters in Shanghai in April 1995, marketing cosmetics and skin-care products. Its factory in Hangzhou was its first outside the US.
Amway has a US$100 million joint venture (JV) factory in Guangzhou producing personal care and household-cleaning goods. In April 1995, it began selling in seven cities - Guangzhou, Shenzhen, Fushan, Zhongshan, Shantou, Xiamen and Fuzhou. The firm started operating in Shanghai in January 1996, and in Hangzhou and Nanjing in July 1996. While it markets more than 400 products in the US, its China venture sells just 21 lines, including shampoos, soaps and detergents. It plans to build a cosmetics factory in the Pudong district of Shanghai and a plant in Hangzhou producing vitamins and health food.
Clampdown on expansion
But the government has already moved to slow the industry's growth. MLM firms must undergo a year of consolidation before applications to branch out into other cities are approved. SLDS companies can still seek approval to enter other regions, but regulations vary from area to area. KK Chua, president of Mary Kay Cosmetics Inc in Shanghai says: `Everyone is coming to a standstill for the time being, especially MLMs.'
Direct-selling companies, however, say they welcome the regulations. `{The government} cleaned out the market. {China} had proper companies, but also illegal schemes creating a bad reputation for the whole industry,' says Percy Chin, general manager, East China, of Amway (China) Co Ltd.
MLMs took the brunt of legislation. According to its distributors, Amway hoped to enter Beijing this year, but was turned down by the government. It is also questionable whether Mary Kay will meet its goal of expanding to 30 cities in China by 2000.
The industry is attempting to reinforce its legitimacy through such methods as television commercials and full-refund policies. And it has so far managed to attract plenty of eager distributors. People line up for hours at Amway's three wholesale centres in Shanghai to register and buy startup kits and products. The hopefuls range from academics to taxi drivers, most of whom sell on a part-time basis.
Avon introduced direct sales to China; the industry now spreads across the country
Under central government regulations, distributors must be Chinese citizens and more than 20 years of age. Full-time students, party members, government officials and military personnel are barred.
Hong Kong, Taiwan and Macau nationals come into China only as 'trainers' for MLMs, but, in practice, they often sponsor other sales people and do a bit of selling themselves. There are about 300,000 Amway distributors in China, with more than 70,000 in Shanghai alone.
The work offers opportunities that were unavailable in China only a few years ago - such as entrepreneurial independence for little initial capital and almost no risk. Amway's start-up kit costs Rmb700, refundable within one year. Unsold products are also returnable.
For successful sellers, returns are high. Mary Kay directors can earn between Rmb12,000 and RmbI7,000 a month. Top-performing Amway distributors can earn from Rmb10,OOO to more than Rmb30,000 a month. But only 1 % to 2% of the distributorship works on a full-time basis.
Adapting to the market
Companies have had to adapt to the Chinese market place. Mary Kay has revised its sales principles to appease any government sensitivities towards religion. Thus its basic tenet of `God first, family second, work third' has been altered to `faith first, family second, work third'. China also prohibits Amway from overly rewarding distributors, so as to avoid the potential idolisation of top earners.
But an almost religious fervour can still be detected. `Amway is allowing Chinese people opportunities to feel the "power of the group", to feel everyone is working for the same goal,' says distributor Gu Xiaohua, a Shanghainese secretary at a Taiwanese JV export company, who distributes for Amway part-time.
And it is that sense of group empowerment which is beginning to worry the central government. To prevent an increase in mass public gatherings, its approval is required before all direct sales seminars and classes are held, while home meetings are forbidden. Companies are also prohibited from selling training books and tapes to distributors. Distributors foresee more regulatory measures coming into play, such as the prohibiting of overt identification with a particular sales network by groups of sales people at Amway gatherings.
Regulations continue to change almost weekly. `The rules of the game change while you're playing,' says one foreign Amway distributor. In September, for example, Jiangsu residents could apply to become direct sellers in Nanjing. But now only local residents are permitted to do so. Moreover, distributors are allowed to conduct sales within a city, but not provincewide, thus preventing people from becoming travelling salesmen.
Further restrictions at local and provincial levels are likely to continue for direct sales firms. In February, the Chinese government approved Amway's operations in Shenzhen, but the firm could not start to recruit until the local government confirmed its own regulations governing multilevel marketing - something that did not happen until July.
`The government didn't know direct sales before and did not know what would happen when it issued licences. Now it's getting scared,' says Lucy Shih, a Taiwanese Amway distributor operating in Shanghai.
Obstacles for direct sellers also exist at the consumer level. `Few people will buy from Amway unless they're really rich,' says Shih. The price of Amway's dishwasher liquid is Rmb74. Although the concentrated form is equal to 20 bottles of similar retail products, a popular shelf brand costs between Rmb4 and Rmb8. Thus, for MLMs, sponsorship seems to come more easily than sales.
`It's easier to recruit in China because people have fewer opportunities,' says Shih. `But it's harder to sell here. There are fewer Amway products, and people have less money.'
Still, direct sales companies seem to be in China to stay. Mary Kay has more than 7,300 beauty consultants, including managers and directors, in China, with about 6,000 in Shanghai alone. From April 1995, when it set up in China, to the end of that year, it grossed US$2.1 million at the retail level in Shanghai.
英语市场调研报告Cosmetics sales soar
According to China's National Information Service, Mary Kay's gross cosmetic sales in Shanghai last year exceeded over-thecounter sales of any individual department store's local or foreign cosmetic brands in the city. The company now operates in Shanghai, Hangzhou and Nanjing, and expects turnover to reach US$18.5 million this year.
According to Chua of Mary Kay, there are at least four companies with monthly sales of more than US$6 million.
In general, direct sales companies that manufacture cosmetics seem to have a head start in China. The cosmetics industry grossed US$1.5 billion in 1995. The market is expected to grow to between US$7 billion and US$8 billion by 2003.
From Se ptember 1,1995 to May 31 last year, Amway's gross income was US$30 million, with US$17 million generated during March, April and May. But Amway paid US$17 million in taxes from September 1995 to August 1996.
Although Amway is `happy with sales volume thus far', management admits that its main objective, at the moment, is the development of the market. But, from all sides, it is a market that is set for another year of substantial changes.
A lion dance for the opening of an Amway product centre in Guangzhou in April 1995