How to Sell the American Dream (Without Getting Banned from China)

By Noelle Mateer, November 14, 2017

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Cui Ning posts Moments on WeChat five times per day. Sometimes they’re re-shares, taken from her friends’ timelines. Sometimes they’re photos of her with colleagues at a cooking class sponsored by eSpring® Water Purifier. Other days it’s a selfie with the latest shade of ARTISTRY® lipstick. If she’s really excited about something, she’ll post photos of it multiple times in one day, like with the ARTISTRY® Intensive Skincare Advanced Vitamin C & HA Treatment.

I often receive personal messages from Cui, though I suspect they’re also being sent to others. Some days, she drops a line to say “nihao” or “you’re great!” Once, she wrote: “Buy RMB1,500 worth of Amway products, get one package of sanitary pads for free.”

No matter what, her grating online presence is about one thing: American mega-corporation Amway. But Cui is more than a fan. She’s a convert and an evangelist. She is, in Amway speak, an Independent Business Owner (IBO).

On Amway and China's pyramid scheme crackdowns.

On Amway and China's pyramid scheme crackdowns.
The Amway Experience Center in Beijing

Amway sells soap, vitamins and makeup, but what it really sells is the American dream. Through seminars, motivational speakers and aggressive recruiting, the company tells anybody who will listen how they, too, can become rich – by purchasing an inventory of Amway products and working as an independent salesperson. It’s what Amway stands for: the American Way.

The corporation is a pioneer in the direct-selling industry (sometimes known as ‘door-to-door sales’) for its ‘multilevel marketing’ (MLM) structure. In an MLM, sales reps can make money from selling soaps, sure – but they can make even more from recruiting more sales reps. This has led to widespread aggressive recruiting tactics that lead some critics to call Amway a pyramid scheme, or worse, a cult. 

In the US, a 1979 court ruling determined that Amway was legal. China, though, did not: after Amway and other MLMs entered the Mainland market in the 90s, hundreds of local copycat schemes exploded – causing widespread riots when they later collapsed. In 1998, the government responded by banning MLMs outright, calling the worst of them “evil cults, secret societies and superstitious and lawless activities.”

The Amway Experience Center in Guangzhou

Amway was banned for years, but China’s 2005 ‘anti-MLM’ regulations, ironically, allowed the company to muscle its way back in. By codifying China's definition of an MLM, the regulations laid out all the steps Amway could take to not be considered one. And so, to sidestep its MLM status (while still operating as an unabashed MLM scheme in nearly every other country it sells in), Amway opened brick-and-mortar stores and and tweaked its payment scheme. Then, Amway stepped up its guanxi game. The company established the Amway Charity Foundation, working in collaboration with the Shanghai Charitable Fund and the Communist Youth League of China. It sponsored China’s team at the 2012 Olympics. And it sent hundreds of Chinese officials to study public management at Harvard (and tour Amway’s headquarters in Ada, Michigan) in a program called ‘Amway Fellows.’

Today, China is by far the company’s largest market. Still, Amway’s rocky history in China impacts its image – and now, Amway has invested heavily in massive, museum-like Amway Experience Centers, currently opening in cities nationwide. Shenzhen’s Amway Experience Center is still under construction, but last year, a Center was unveiled in nearby Guangzhou. Shanghai’s 7,500spm Experience Center opened in 2014. Beijing’s first Amway Experience Center, meanwhile  – a steel and glass behemoth in the center of Sanlitun, the capital’s cosmopolitan heart – debuted just this spring.

On Amway and China's pyramid scheme crackdowns.

Designed to distance the company from the toxic ‘MLM’ tag, these couldn’t be timed better. China is currently experiencing a fresh wave of illegal pyramid schemes, and the government is threatening another MLM crackdown.

“Hello,” says a woman the minute we step inside the Beijing Amway Experience Center, whisking us away on a tour of the complex. Not that we asked for a tour. This is simply what happens – Amway representatives wait for visitors, greet them enthusiastically, and before they know it, they’re 90 minutes deep in Amway lore.

It’s a high-wattage, multi-sensory experience, bouncing throughout the building’s many display rooms: ‘SMART SHOPPING,’ where all-purpose floor cleaners are displayed behind plexiglass like precious objects in a gallery; the eSpring®® room, where short films about Amway’s air and water purifiers play to a Pirates of the Caribbean-style soundtrack; and the Nutrilite hall, where an actual John Deere tractor sits among artificial flowers in an ode to Nutrilite’s organic-farm origins. (Nutrilite is a brand of nutritional supplements Amway took over in 1994.) Here we gaze upon a bronze statue of the Nutrilite founder, and peruse black-and-white photos of his time spent studying in Shanghai in the 1910s and 20s. “Nutrilite and China have a rich history together,” says our guide.

On Amway and China's pyramid scheme crackdowns.Home Living, a kitchen space showcasing Amway products

Flattering depictions of nondescript Western men are everywhere in the Experience Center, but especially within ‘AMWAY CULTURE.’ After watching a short film about founders Rich DeVos’ and Jay Van Andel’s perfectly average middle-class upbringings, we come across a photo of former US President George W. Bush, onstage at Beijing’s own Wukesong Arena. In 2015, Amway flew Bush to Beijing to speak at Amway China’s 20th anniversary. Over 12,000 Amway IBOs were in attendance. Bush and Chairman Steve Van Andel spoke onstage about leadership.

“The US government likes Amway very much,” says our guide. “I’ll send you a picture later of Betsy, on WeChat.”

Betsy DeVos is the wife of Dick DeVos, Amway's former president, and the sister-in-law of Doug DeVos, Amway’s current co-CEO. Betsy and her family have donated roughly USD$200 million to Republican causes and campaigns over the years. In December, Trump named her as his pick for Secretary of Education.

This, of course, is largely skipped over in an Amway Center tour. (At a tour of the Experience Center in Guangzhou, meanwhile, guide Sun Rong says, “One of the founders was definitely influential in the Republican Party… in finance... or something.”)

On Amway and China's pyramid scheme crackdowns.
Former US President George W. Bush poses onstage at Beijing's Wukesong Arena for Amway China's 20th Anniversary, in 2015

Anti-pyramid scheme expert Robert FitzPatrick knows Amway’s lobbying practices by heart. The activist has been fighting against the company – which he personally considers a pyramid scheme – for decades. So when China banned direct selling in 1998, he was thrilled.

“I thought, ‘This is remarkable,’” he says. “‘This is the first country that appears to be showing a willingness not to let these [MLMs] ravage its nation.’”

In the run-up to China’s 2005 anti-MLM legislation, Chinese officials allegedly sought out FitzPatrick’s expertise. He met with professor Yang Qian and his translator in Washington, DC. FitzPatrick says the professor was consulting for Chinese officials drafting the 2005 regulations. (That’s was unable to independently confirm this.)

“It appears to us that MLMs have very little affect economically,” said Yang through his translator, at the meeting. FitzPatrick says this was an astute observation.

“Very little product is actually moved through MLMs,” he explains. “If MLMs went away tomorrow, it would have no effect at all in terms of getting products to the public.”

On Amway and China's pyramid scheme crackdowns.

On Amway and China's pyramid scheme crackdowns.
Displays in Beijing's ‘Amway Culture’ hall

After all, he says, it’s not like China would run out of all-purpose floor cleaners. Instead, he believes that Yang and his colleagues understood that MLMs have “very little economic value, but an incredible social purpose.” Their real product isn’t makeup or supplements – it’s hope.

“People invest in MLMs because they see them as an alternative to low-paying jobs, debt and the rising cost of education,” he says. “They believe they can truly get rich."

On Amway and China's pyramid scheme crackdowns.

On Amway and China's pyramid scheme crackdowns.
Rooms in the Amway Experience Center where Nutrilite employees offer health exams and fitness classes to Amway IBOs

On the second floor of the Experience Center, the tone of our tour changes. Our guide is no longer selling Amway products, but the Amway lifestyle. We watch a slideshow of Amway China staffers on vacation in Alaska, taking selfies with glaciers from the deck of their cruise ship. Here we learn the benefits of life as an Amway employee – top sellers get all-expenses-paid vacations to destinations like Bali and Australia. Then our guide raises the stakes.

“Would you like to meet our manager?” she asks. Yes, we would. She whisks us downstairs, where we promptly shake hands with him. I begin to ask if he has time to answer some questions, but he’s too busy leading us elsewhere. This choreographed dance takes us to Rich & Jay, a cafe named for Amway’s founders, where he seats us by a massive poster of the two men. Their faces are everywhere – on the shop’s logo, on each styrofoam cup, on the Starbucks-style merch that pairs their logo (faces) with icons of Beijing. 

On Amway and China's pyramid scheme crackdowns.
Rich & Jay, the cafe in the Amway Experience Center

A personality cult is a weird marketing strategy for such normal-looking dudes, I think. But they are rich, white, corporate American men, and perhaps that is reason enough for many to adore them.

Here is where we first meet Cui Ning. Cui is writing down a series of numbers on a sheet of white paper, and the numbers keep getting larger and larger. These are our fortunes, and they’re growing the more we invest in Amway. Our That’s intern, Vivian, turns to me and whispers: “That’s a lot of money.”

That money can be ours, Cui says, if we sign on to become Independent Business Owners today. Once we’re IBOs, we can buy Amway products at wholesale prices, and then sell those at retail prices to our friends, family members, colleagues and WeChat contacts. The more we buy, the more we can sell. We’ll be rich in no time. (Elsewhere in the world, IBOs make money by recruiting more people to sign up, and then making commission off their sales. But that’s unabashed multilevel marketing, which is illegal in China, so Cui can’t do that. She can, however, get a bonus for signing us up.)

The two men at our table, both in their 20s, sign up immediately. Then Cui turns to Vivian and asks, “How old are you?” She’s 17.

“Oh, when’s your 18th birthday?” she asks. “You can join then.” When I look at the other tables in Rich & Jay, everyone is having this same conversation. The brand-new Dunkin Donuts next door is empty.

On Amway and China's pyramid scheme crackdowns.The founder of Nutrilite, immortalized in bronze, next to photos of his time spent in Shanghai

Dong Chao, a blogger from Shanghai who writes regularly about Amway, says his father has been an IBO for decades, but hasn’t made any profit.

“The worst part, for me, is that their sinister intentions are disguised by benevolent appearances,” he tells That’s. Still, Dong’s father believes in the American Way: “He sees himself as the deliverer of health. And the friendly atmosphere in Amway’s classes makes him happy. It makes him want to stay in it. Because of those meetings, he’s always absent from home.”

It’s this devotion to the brand over all reason – even after years of no success – that leads critics to brand Amway as a cult. Indeed, IBOs regularly gather at Experience Centers to listen to motivational speeches, not unlike sermons, about the value of hard work. Last month, Cui posted a photo of someone who’d experienced a miracle: The week’s speaker was an old, handicapped woman who, after attending a Nutrilite talk on healthy living, found herself able to walk again (for five minutes at a time, anyway).

“[Amway] evokes a reaction from people that is like religious fervor,” says FitzPatrick. “It operates like a cult.

“That was the big concern about pyramid schemes in ’98, when they shut them all down. It was a concern from a security point of view. It caused riots.”

This past July, protests erupted in Beijing. Hundreds of people, some from far away, demonstrated against a government crackdown on Shanxinhui, an MLM that it has since been branded in state media as a ‘business cult.’ Since then, the State Administration for Industry and Commerce announced it will work with the Ministry of Public Security to further combat pyramid schemes in China, which are on the rise. Police investigated over 2,000 pyramid scheme cases in 2016, nearly 20 percent more than in 2015, according to Xinhua.

On Amway and China's pyramid scheme crackdowns.

A September New York Times article connects this rise in illegal pyramid selling to China’s slowing economy. But Ouyang Wenzhang, director of China’s national Direct Selling Network, believes otherwise.

“This is not related to unemployment, because in China, unemployment is not very high,” he says a rich, slow Beijing accent. “According to government departments, the unemployment rate is 4 to 4.3 percent. In 2012, America claimed that it was 6.5, and in 2013, 6.4. So actually, some foreigners will misunderstand that the unemployment rate in China is high. This is not the main reason for the proliferation.”

Ouyang represents China’s official attitude towards direct-selling corporations today. He is quick to condemn illegal pyramid schemes like Shanxinhui – but equally quick to defend licensed corporations like Amway.

“Amway has many positive influences on Chinese society,” he reads, from a stack of printouts he’s brought to our interview. “They have become a model for direct selling in China. Amway has also formed a specific and unique way to promote trade corporation between the US and China.”

If it’s not unemployed people who are joining these companies, then, I ask who is. He reads a list consisting of three types of people: those who want to start their own business, those who are employed in companies that “operate in the traditional way, but who met some challenges that were extremely difficult to overcome, and therefore turned to direct selling,” and finally, “young people who have dreams and want to achieve something big.”

On Amway and China's pyramid scheme crackdowns.
Ouyang Wenzhang, the director of China's Direct Selling Network

I ask if there’s anything Ouyang would like to say off his prepared script, but no, he says, he would prefer to read. When I contact Amway China’s public relations department later, I’m told no one is available to comment. A week later, I get a call from an Amway China PR representative, imploring me to send her my piece before I publish it. I refuse. She says, “Are you interested in politics?” Yeah. “We have nothing to do with politics,” she tells me. “We’re just a company.”

Later that afternoon, I finally get an official statement: “In China, pyramid fraud is called ‘MLM.’ Amway is not a pyramid scheme.” Included in the statement are a list of reasons why: Amway’s ultimate goal is the sale of products; to join Amway, IBOs do not have to pay ‘entry fees’ (they do, however, have to invest in Amway products); IBOs are compensated based on their sales performance; Amway has over 50 years of history and operates in over 100 countries; and also, employees can quit at any time. 

Applauding one’s company for allowing employees to quit of their own free will seems a bit bizarre to me. But luckily for Amway China, IBOs are doing a lot of the PR work for them. When I ask Cui what she thinks of people who consider Amway a pyramid scheme, she tells me: “Only a good, big, established company would receive that kind of attention, and have other people be jealous of it. Some people are bitter or salty.”

On Amway and China's pyramid scheme crackdowns.
Beijing's new Amway Experience Center

Two weeks later, I’m back at the Experience Center. I wander through the displays, this time without a guide, but with my colleague, Iris, instead. Behind us, a group of women talk about Nutrilite. One says her husband’s kidney problems cleared up after he took the supplements. Another mentions an elderly friend of hers who’s unusually energetic, thanks to the brand. Iris turns to me and whispers.

“People in China are so afraid of dying now,” she says. “Before, life was hard. Even just 10 or 15 years ago, life was much harder. But now, people see that things are getting better and better. They want to be around for the future. I think that’s why things like Nutrilite do so well here.”

Amway’s best product, after all, is hope. And I get the feeling Cui still hopes that I’ll buy her products. When I get back to the office that afternoon, I have a notification from WeChat. It’s a message from Cui saying, “Hey, you’re great!”

Additional reporting by Vivian Liu, Qinxin Lu, Iris Wang, Jocelyn Richards, Sky Thomas Gidge and Yuka Hayashi; graphics by Iris Wang

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