Among the incongruous scenes in Chinese cities like Shanghai and Beijing are little stores selling the wares of Amway, Mary Kay, and other companies that normally rely on an army of foot soldiers to peddle their products. For seven years, the Chinese government banned these direct-sales companies from using chains of individuals to sell cosmetics, household cleaners, and other goods from their homes. So, to avoid missing out on the growing Chinese market, the companies radically shifted their business models. For the first time, they opened up stores and factories, absorbing the higher costs, and some reported taking huge losses.
"I am always running into friends who have been to China and they say, 'We saw your store,'" says Truman Hunt, CEO of Nu Skin. Despite running about 160 stores in China, he says the Utah cosmetics and nutrition company lost money there. "It has been a very long-term project," says Hunt, who is also head of the World Federation of Direct Selling Associations, about the waiting game that Nu Skin and others have played.
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