Amway sees China sales grow by 8 pct in 2014

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 Chinese commercial regulator, Reuters reported Monday.

"We've been vigilant for 20 years," Douglas Devos, president of Amway, said 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 from fraud."

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 percent 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 by South Korea with sales of less than $1 billion.

Last week, China's State Administration of Industry and Commerce (SAIC) announced that it confiscated 3.11 million yuan ($500,600) from Nu Skin and fined the firm 250,000 yuan.

The US-based company marketed items it was not -licensed to sell and overstated the potential results from using some of its products, the SAIC said in a statement. Six Nu Skin sales agents also were fined 130,000 yuan and were ordered to turn over 1.37 million yuan in illegal sales.

The SAIC is preparing to amend its regulations on direct selling and increase its supervision over the sector. The new rules are expected to tighten guidelines for sales agent training.

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 marketing firms.

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.

Michigan-based Amway last year broke ground on a $10 million botanical research center in Wuxi, East China's Jiangsu Province, to study plants used in traditional Chinese medicine. It also has a manufacturing plant in Guangzhou, South China's Guangdong Province, and R&D facilities in Shanghai and Guangzhou.

The company presently employs 9,000 staff in China and claims an active sales force of 300,000, operating in 280 cities in the country.