Why Mary Kay Cosmetics is thriving in China:
Mary Kay did not have any easy transplant to China upon its arrival in the mid-1990s. Direct-selling didn’t catch on rapidly in a country where knocks on the door could signal something far less benign than the offer of a new moisturizer. And in the Wild West days of early Chinese capitalism, pyramid schemes and Ponzi schemes thrived. When direct-selling was banned in 1998, May Kay retrenched and changed its model. It set up showrooms around the country, paid agents to represent the products, and maintained corporate control of the inventory. In 2006, however, a new law permitted direct-selling. Sales directors must have fixed locations and licenses. And selling in homes is still frowned upon. The company maintains 35 showrooms around the country.
Mary Kay China has emerged as a juggernaut. It has 200,000 sellers, and sales grew 50 percent in 2008. “This year, even with the economic situation, we’re about 20 percent growth over last year,” said Paul Mak, president of Mary Kay China. China now accounts for 25 percent of Mary Kay’s overall sales.
Mak showed us around the high-gloss, spotless offices with great pride. Four floors, two of them connected by a curving pink staircase. There’s a break room with foosball and a pool table and a room for women—70 percent of the corporate arm’s employees are women—to bring small children. In the spirit of Mary Kay, who viewed her efforts as equal parts business and social work, the company makes interest-free loans to businesswomen. Mak points to photos of top-producing sellers, women whose ages range from 27 to 62. Women whose accounts bring in 100,000 renminbi per month for a year (about $170,000 in sales per annum) have the right to use a company pink Chevrolet.
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