Yang Qian: Challenges and Opportunities of Direct Marketing Model in China Market
[Beijing Direct News Network September 20th] (Yang Qian)In 2019, the development of China's direct marketing industry is facing a severe test. The government has strengthened its supervision of the health care market, requiring that any problems existing in the health care market that damage people's health and life safety, including all kinds of false propaganda and other illegal business practices, be prosecuted and severely cracked down on in accordance with the law. The health care market is gradually implementing a new policy of strict supervision. The direct selling enterprises with health food, cosmetic and skin care products and consumer goods as the main sales categories have aroused social concern.
The development of direct selling in China has undergone a tortuous process.
According to the international popular direct selling practices, direct selling as a form of retail sales, its main business philosophy is to encourage consumers to experience product consumption and turn to operators, to introduce to other consumers, and constantly expand the sales of products. Due to the incomplete laws and regulations, the development of direct marketing in China was once hampered. After China promulgated the Regulations on Direct Selling Management and the Regulations on Prohibiting Pyramid Selling in 2005, the development of direct selling has a basic legal and regulatory environment. Over the past 10 years, the direct marketing industry has played an active role in meeting the individualized needs of the market, creating employment, transforming traditional industries and stimulating investment. It has created considerable tax contributions for local areas every year and is gradually recognized by the society.
Of course, there are different opinions about direct selling in society.
In fact, it is meaningless to compare the practice of overseas direct selling with the development of China's direct selling market. Because of China's unique direct selling legislation, the operation mode of China's direct selling is quite different from that of the international popular mode. Direct selling is no longer a traditional way of selling in China.
According to the Regulations on Direct Selling Management promulgated in 2005, China implements the administrative licensing system for the management qualification of direct selling enterprises. In order to engage in direct selling operations, it is necessary to obtain the business license issued by the Ministry of Commerce, and to set up production plants in China to sell the products produced by its own enterprises and parent companies.
In fact, according to Chinese laws and regulations, direct selling enterprises are typical entity manufacturing enterprises in China. They are only allowed to sell products by direct selling, and their access is higher than that of general manufacturing industries. Therefore, China's direct selling enterprises are the combination of real economy and modern service industry. They have both the attributes of manufacturing industry and the characteristics of service industry. Direct selling has become a special type of industry in China.
From the perspective of industrial form, the development of direct marketing not only has good opportunities for development, but also has severe challenges.
From the perspective of opportunities, first of all, as an industrial component of consumer goods supply, the development of direct marketing is very consistent with the general trend of China's economic development. In 2018, China's GDP reached 90,030.9 billion yuan, an increase of 6.6% over the previous year. The contribution rate of final consumption expenditure to GDP growth was 76.2%. Consumption-driven economy has become the main factor of economic growth. In 2018, the per capita disposable income of Chinese residents was 28,228 yuan, with a real increase of 6.5% after deducting the price factor. The national per capita consumption expenditure was 19853 yuan, with a real increase of 6.2% after deducting the price factor. The Engel's coefficient is 28.4%, which is 0.9 percentage points lower than that of last year. It is showing the consumption characteristics of developed countries and has unlimited potential in the consumer market. These are very favorable economic bases for the development of direct selling industry.
Secondly, the orientation of the direct selling industry is very consistent with the strategy of healthy China.
More than 70% of the performance of the direct selling industry is related to the concept of human health. In recent years, a considerable number of direct selling enterprises have gradually changed to the orientation of health management in line with the market development trend. This is highly in line with the requirements of Chinese residents'consumption entering a stage of high-quality development. As we all know, in 2016, the Central Committee of the Communist Party of China and the State Council issued the Outline of the "Healthy China 2030" Plan and formulated an action plan to promote the construction of a healthy China. The outline requires that we start with a wide range of health factors in order to popularize healthy life, optimize health services, improve health security, build a healthy environment and develop healthy industries, which is undoubtedly a very favorable market environment for the development of direct marketing industry.