* Sales estimated to top $5 billion in 2014
* Government watchdog preparing to amend regulations
* New rules expected to tighten guidelines for training
By Matthew Miller
BEIJING, March 31 Sales at Amway Inc, the
multi-level marketing company that earned about 40 percent of
its total revenue in China last year, are likely to be
unaffected by a recent investigation of Nu Skin Enterprises Inc
and heightened scrutiny from Beijing's commercial
"We've been vigilant for 20 years," Douglas Devos, president
of Amway, told Reuters last week. "Pyramids are frauds. Direct
selling is not pyramids. When there's a crackdown on pyramids,
that's great because it distinguishes legitimate direct selling
Devos estimated that Amway's China sales, which amounted to
$4.8 billion in 2013, will surpass $5 billion this year and grow
between 6 and 8 percent.
Amway reported about two-thirds of its $11.8 billion global
revenue last year in the Asia-Pacific region, where sales in
Japan amounted to about $1.2 billion, followed South Korea with
sales of less than $1 billion.
Last week, China's State Administration of Industry &
Commerce (SAIC) announced that it confiscated 3.11 million yuan
($500,600) from Nu Skin and fined the firm 250,000 yuan.
The Provo, Utah-based company marketed items it was not
licensed to sell and overstated the potential results from using
some of its products, SAIC said in a statement. Six Nu Skin
sales agents also were fined 130,000 yuan and were ordered to
turnover 1.37 million yuan in illegal sales.
SAIC also is preparing to amend its regulations on direct
selling and increase its supervision of the business. The new
rules are expected to tighten guidelines for sales agent
In October, SAIC also issued fresh regulations covering
incentive systems aimed at stopping pyramid sales.
Amway, which launched its China business in 1995, was
briefly shut down in 1998 after officials voiced concern about
the sales techniques and incidence of fraud at multi-level
Amway subsequently revised its business plans and opened
retail outlets as part of its operations.
"If there's ever a question about our business, they know
where to find us," said Devos.
Ada, Michigan-based Amway last year broke ground on a $10
million botanical research center in Wuxi to investigate plants
used in traditional Chinese medicine. Amway also owns a
manufacturing plant in Guangzhou and R&D facilities in Shanghai
The company presently employs 9,000 workers in China and
claims an active sales force of 300,000, operating in 280 cities
throughout the country.
($1 = 6.2122 Chinese yuan)
(Editing by Matt Driskill)