China’s evolution has fascinated the world for three decades. Arguably no other country in human history has seen as swift a rise in its global role in such a short time. Since re-opening its doors to the West in the early eighties, China’s economy has continued to grow at an unmatched pace and has forever changed the global economy. In Mandarin language, “China” is pronounced “Zhong Guo,” which in English roughly translates to “middle kingdom.” Recent history has shown China becoming a center of development and a desirable place for growth in many business sectors, including direct selling.
The greatest resource a country or business could ask for is people. The most populous nation in the world (1.35 billion people) has already shown a large influence on direct selling, both inside and outside mainland China, and represents amazing opportunities for growth. Put in perspective, China’s population is equivalent to that of North America, South America, Australia, New Zealand, and all of Western Europe combined. Today there are over 40 million overseas Chinese, mostly living in Southeast Asia, where they make up a majority of the population of Singapore, and significant minority populations in Indonesia, Malaysia, Thailand, the Philippines and Vietnam—all growing markets for direct selling. Overseas Chinese not only have tightly connected communities where they live, but they also have strong ties back home, which makes networking and building international businesses quite simple. There are nearly 5 million people with some Chinese descent living in the U.S. and Canada alone, with the majority of them being only one or two generations removed from China. Most still have friends, family, and business connections in the mainland.
Direct Selling in China
Direct selling inside mainland China comes with unique government regulations. While foreigners are officially prohibited from being directly involved and multilevel marketing is officially illegal, the business continues to grow at a rapid pace. It began in the early nineties and saw rapid expansions as the Chinese began to learn about this powerful and new way of marketing and building a business. Because of that initial growth surge, the government banned all direct selling businesses for a number of years starting in 1998 while taking time to define rules around how legitimate direct selling companies should operate in China. At the time of this article, the government has granted direct selling licenses to 45 companies, 22 of them foreign companies—nine from the West and thirteen from Hong Kong or Taiwan. The largest is an American company creating over $4 billion in sales annually inside the mainland alone. That’s a staggering number by U.S. standards. Most people believe the near future will show the Chinese government continuing to loosen certain regulations, grant more licenses to legitimate companies, and eventually become the number one market in the world for direct selling. Current estimates show combined direct selling revenues in the Greater China region growing at more than 20 percent each year, with total sales equivalent to $27.3 billion and predicted to hit $90 billion in the next ten to fifteen years. In comparison, total U.S. direct selling revenues stand at $32 billion annually.
Why Are the Chinese Great at Networking?
Challenges and Caveats
Quick change and rapid growth always come with challenges. China is no exception, as “generation gaps” almost take place not in decades but seemingly every few years.
While China is working to make progress in many of these areas, it is reasonable to assert that they have much work ahead of them.
What Do Chinese People Want?
The Chinese get excited about and will spend money for sophisticated travel, luxurious goods, social status, recognition, financial freedom, health, and control of their own destiny. By some estimates Chinese people will purchase half of all luxury goods worldwide next year. They are motivated to stay young, beautiful, thin, and healthy. The health and beauty market in China is projected to become the largest in the world in the coming years.
Thirty years ago it was difficult for the Chinese to leave their country and travel overseas. Today any significant tourist destination in the world is fully staffed with Chinese speaking employees and tours designed only for Chinese travelers. According to government estimates, Chinese tourists spend nearly $50 billion abroad each year. Experiencing the world is obviously important to many Chinese.
It’s human nature to want to feel important, to realize achievement in front of peers, to be listened to and respected. However, the importance of genuine recognition can not be overemphasized when doing business in Chinese communities around the world.
For mainlanders especially, coming from an environment where only the top performers are awarded, it goes without saying that recognition is a critical element to building a team. There are high levels of expectation placed upon traditional workers and competition is fierce. Therefore, giving people recognition, rewards, and appreciation for their efforts and results while building their team should be a top priority for all leaders.
People are learning Chinese language all over the world. Thirty years ago Chinese people had a difficult time traveling anywhere, for either leisure or business, and speaking their native language. Today, it’s commonplace. In a few short years the Chinese economy will eclipse the U.S economy as the largest in the world, having recently outgrown Japan for the number two spot.
The significant impact of Chinese spirit, work ethic, culture, and education to this point in human history is undeniable. All signs point to this impact only growing in the decades to come. Regardless of where you live, it would be wise to intentionally include in your business plan this amazing group of people!
SHAWN GRAY has been building his network marketing business mainly in Greater China for the past five years. Previously featured in the Jan/Feb 2010 issue of Networking Times, Shawn and his wife Carmen are featured Master Networker in this issue here.
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