Ever think about having a business in China?
We have business in seven countries outside of the United States. The business model is the same in almost all the countries we operate in. Essential oils are purchased and we make a percentage of the distribution.
Partnering with an essential oil direct selling company such as doTERRA makes international business much simpler. We don’t have to worry about international businesses licenses, warehousing, shipping, administration, and having a physical office there because our partner doTERRA takes care of that. We focus on the distribution side.
A couple years ago, doTERRA opened up their first retail stores in Beijing and Shanghai. They just opened a store in Gunagzhou and are planning to open one in Chengdu. The growth is phenomenal.
If we wanted to learn more about how the essential oil business is done in China, we had to travel there ourselves.
There is one question on everyone’s mind, “If multi-level marketing is illegal in China, how do companies like Amway, Herbalife, Avon, and NuSkin operate in China (and generate hundreds of millions of dollars in revenue)? The million dollar question: How do US based distributors get a slice of the pie?”
We booked our trip to Shanghai and set up an appointment with the corporate office to learn more. Many of the questions we had could not be answered by the staff in the United States. Because the industry is heavily regulated in China, some of the information had to be shared in person to make sure we don’t misunderstand anything and are operating business correctly. Right now is the best time to go while they are in the development phase. As a leader with doTERRA, I can schedule an appointment, once they’ve grown too big, they may not have time to talk to me.
Direct Sales in China
China defines direct selling as "sales away from a fixed retail location"
In 1998, China banned direct selling, In 2006, after heavy lobbying from American companies, China lifted its ban. And since then, direct selling, with some modifications, has flourished in China, growing into a $35 billion industry that now markets products as diverse as health supplements, cosmetics, toothpaste and dishwashing liquid.
It surpassed countries like Japan and is now the Number 2 Market behind the United States. It is a strategic market for doTERRA. doTERRA founders and executives Corey Lindley and Greg Cook has experience with running a successful direct selling company in China. For this reason, doTERRA succeeds, where many new companies fail. Greg Cook now lives in China with his family.
Visiting the Corporate Office
doTERRA chooses locations that best represents its brand and image. For example, doTERRA’s Tokyo office is in the Omotesando district which is very high end. Likewise, doTERRAs Shanghai Retail Store and Corporate Headquarters is located in the Jing’an District.
The corporate headquarters is in a different building than the retail store, it is located on West Nanjing Road, home of one of Shanghai’s premier shopping districts. When I our China business associate picked us up, he asked, “What do you think of Shanghai?” I told him it looks nice. He explained that I was in the nice part of Shanghai.
The headquarters in Shanghai is robust. This is where they handle all of the operations of Mainland China. Here I entered a meeting and met with Anne Tang of doTERRA China.
I wanted to know about the market. Who buys the oils? Are the sales product driven or opportunity driven? How exactly does doTERRA operate in China? My goal was to receive clarity because everyone I talked to about China had a different (and often incorrect) view of how direct sales business operates in China.
Are the sales product driven or opportunity driven?
I was told that many other direct selling companies in China were money driven. I learned that doTERRA is product driven. In the US, less than 20 percent join for start a “for profit” business enterprise. In China, less than 5 percent are looking for an income opportunity. It may grow in the future. I was amazed that millions of dollars worth of product was being sold solely based on people wanting essential oils.
Who buys the oils?
Our family friend from Hong Kong has a textile factory in China. He is well connected. We had factory owners who purchased essential oils for their family’s health. Lamborghini owners were not my typical demographics. Were these the demographics? After all, American products are high ticket items in China.
I learned that there are a variety of clients for doTERRA. There were the clients like our family friend. I asked if any do the business considering they own businesses with millions of dollars of revenue. Ann shared that many wives of affluent business man do this as a business not because of a financial need, but because they love helping others and it empowers them as a woman, so they are not living under their husband’s shadow. Ann shared how she loves how doTERRA empowers women, especially women in China.
Ann also shared about the rising middle class in China. Much like America, its citizens are looking for ways to supplement their income.
It took me a while to grasp this because I was taught in school that China was communist, which were anti-capitalist. After some time in Shanghai, I knew she was right. I saw local small business owners every where in the city. The people of China are moving towards self-reliance.
A running joke is that China is more capitalist then the United States.
In China, they call this movement “中国特色社会主” Socialism with Chinese characteristics. Business laws vary from city to city, province to province in China. Cities like Shanghai are a great place for business.
A lot of people tell me that building a direct sales business in China is next to impossible if you are not from there. This is not true, some of the top essential oil business owners in China are not from there.
I learned that if I decide to build a big business in China,
-The Right People
-Communication is important. If you don’t know the language, you are going to have to find bilingual associates or hire a translator
-Communication Tools are different. We take internet freedom in the West for granted. If you have an essential oil video on youtube, you can’t share it. There is no FaceBook. Either all you associates have to use a VPN or you are going to have to learn how to use tools like QQ, Baidu, and WeChat.
-Lots of Time and Resources. If you can’t travel there consistently every month, you are better off building your business where you live. It will take resources to translate and operate business
-Learning the system
The system in doTERRA China is completely different than the rest of doTERRA around the world.
The terminology, rules, and process is different. Instead of going through doterra.com, you must go through doterra.cn There is a lot I wish to share here, but can’t because of sensitive and proprietary information.
After many business meetings, we spent a couple days at the brand New Shanghai Disneyland which just opened
a couple months ago. Even though it was hot (over 100 degrees), it was AMAZING!! We stayed on site at the Toy Story Hotel. We had a view of the castle from our room. Wee booked the room right when it was announced. They sold out of rooms shortly after.
The food in and out of the park was great. They had a variety of restaurants to choose from. The quality of service is the same quality of service you would expect from Disney.
If there is any sign that China is living the American Dream, its the launch of Shanghai Disneyland. China’s middle class is growing. More businesses are thriving. Experts predict that China’s economy will surpass the United State.
When you have an international business, you are not dependent on your local economy. So if your local economy crashes, your business can stay afloat. If you would like to share experiences building internationally or would love to learn more about how you can have an international business, please connect with us!
We would love for you to join our journey of building an international business!