Amway: the surprising growth of a cult-like company in China

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Multi-level marketing (MLM, 传销 chuánxiāo) or direct selling is a business model where a company relies on its own customers to sell its products. The customers make a commission not only on their own sales, but also on sales of their own customers who are recruited as salespeople. This is essentially the business model of a pyramid scheme, which is how some observers describe America’s largest MLM companies such as Amway and Herbalife.

That’s Beijing has now published a feature on the operations of Amway in China. Noelle Mateer writes that Amway has opened massive propaganda-style ‘experience centers’ across China (one just opened in the middle of Beijing’s Sanlitun area this year), partly to get around the country’s strict anti-MLM rules.

  • MLMs were banned in China in 1998, but anti-MLM legislation passed in 2005 paradoxically cleared the way for Amway to re-enter China because it defined what the company needed to do to avoid being labelled a pyramid scheme.
  • The legal workaround is the construction of show rooms or “experience centers” that allow MLM companies to sidestep rules against direct sales networks.
  • U.S. Education Secretary Betsy de Vos is married to Dick de Vos, former CEO of Amway and son of one of the company’s founders.

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Jeremy Goldkorn

Jeremy Goldkorn is co-founder of the Sinica Podcast and currently edits SupChina and its daily newsletter.