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

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.

Jeremy Goldkorn

Jeremy Goldkorn worked in China for 20 years as an editor and entrepreneur. He is editor-in-chief of SupChina, and co-founder of the Sinica Podcast.