Direct Selling News August 5^th( China direct selling weekly Lu Jun) As per 2013 Chinese direct selling enterprise performance report,the overall performance of Chinese direct selling industry is RMB 129.34 billion in 2013 with 39.8 percent of growth rate, while RBM 94.6 billion is created by foreign-funded direct selling enterprises which accounts for more than 73 percent of total industries. On the top 10 list, foreign-funded direct selling enterprise takes six,while Amway,Perfect,Infinitus and Marykay have dominated top four of this six with rare opponent. However, the performance of several transnational direct selling enterprises is not ideal enough.

command by remote control,without touch

According to 2014 first-quarter financial reports of Oriflame and Avon,the development of Oriflame remains tepid having entered into China for 10 years, even the performance has slipped down in 2013; While Avon as the world’s direct selling tycoon which affected by the declining sales in China, its loss enlarged continuously  in first fiscal quarter of 2014, the total income has declined 11% with USD 168,300,000 loss of net profit. Under the good direct selling situation in China, why Oriflame and Avon appeared an abnormal state with contrarian slump?

It is said that Oriflame has quietly entered into China since 2014 and started to conduct market research and layout,then officially entered into China market on Jan.9th,2007. At that time,some people said that Chinese direct selling would play a show of “Romance of the Three Kingdoms”: Chinese enterprises represented by Infinitus and TIENS, American enterprises represented by Amway and Marykay, European enterprise represented by Oriflame, which have divided the world into there. But after 8 years, Oriflame,carrying the No.1 flag of European direct selling,still cannot match Amway and Martkay, its performance is declining instead of substantial increasing which cannot reappear the glory of Europe in China market,it also suffered from a typical unacclimatized disease and cannot perform the counterattack with “whatever comes last is best”.

According to the financial report which released by Avon, its performance has continued to decline until today since 2009, the major reason is that Avon’s strategy in China has swayed and cannot get rid of from “bribery case” which has involved for many years. At present,Avon has announced to reach the mutual understanding with the U.S. Department of Justice and SEC under the compromised conditions of federal overseas bribery investigation, which will pay the fine of USD 135,000,000 and other cost to comprise related charge.

The senior research experts in the industry has disclosed that the underlying cause about the declining performance of Avon and Oriflame lies in: top managers have been seen and not heard, president without decision-making power, do anything need to obey the headquarters’ instructions and decisions,which have caused the difficult management out of touch and even issued confused orders.”While Amway can hold its top position in China market,the key is to put the professional managers in an important position with trust, not only decentralize  power in personnel and use plenty of local talents, but also decentralize budget authority,which can give professional managers more space to play without constraint and giving up eating for fear of choking.

NU SKIN and Herbalife can also decentralize power in top management, the development momentum of both is steady and strong and the growth of performance also keeps ahead. In the first quarter of 2014, NU SKIN Greater China Region,which has investigated and fined by the department of China Administration for Industry and Commerce,with the revenue has reached USD278,900,000, compared with USD170,800,000 of last year has increased 63%, which has realized the sharp rise against the trend. While Herbalife Greater China Region,although ” bombed” by short-seller many times, has led the global market with the growth rate of 91% in sales amount which has been called a miracle by American investors.

Change horses in midstream, missing a good opportunity

Seeing from the performance of Oriflame(China) between 2009 and 2013(photo above), the development of Oriflame remains slow for 10 years without bigger breakthrough, but declined in performance, in 2013,the declining rate is about 28%, which only accounts for 1.76% of Oriframe’s overall global performance, while the sales amount by direct selling is so little that only accounts for 6.22% of total performance.

Facing with so embarrassed performance,it seems to have become a continual nightmare for Sweden headquarters of Oriframe,who wants to surpass Amway and Marykay, which has directly caused the successive step down of presidents in China region. At the end of 2007, in less than half year after getting official license, the president of Oriflame(China) Chen Hailin has left her job because the factors of performance and management, which has opened the prelude of constant changing leaders of Oriflame. In Oct. ,2010, the president of Oriflame(China) Ola Syborg has left office; In June,2013, Pierre Madsen has officially announced to leave office as the CEO of Oriflame(China); On Jan. 1