TAIWAN DS SOCIAL IMPACT STUDY DAISY ERIC JAKE MIA

CONTENT Introduction Overview of the Taiwanese direct selling industry The economic and fiscal contribution of this industry The social contribution of the Taiwan Direct Selling Industry

PURPOSE OF THE STUDY To present the direct and indirect social and economic impact of the Taiwan direct selling industry.

The report is based on two surveys, one of direct selling companies and a second of individual direct sellers. 28 companies were asked and 20 returned the survey = 71% respond rate 1789 direct sellers were asked and 535 returned the survey = 30% respond rate

WHAT IS DIRECT SELLING ?

BENEFITS Consumers: DS provides convenience, quality and value for money Product demonstrations, trials and customized service. Direct sellers: Having an own business, opportunity of self-employment with low startup costs. DS also provides schedule flexibility and an alternative for earning income.

TAIWAN DS in Taiwan provides significant financial and non-financial contributions to households, the community and the country.

DS is non-store retailing, it does not require a fixed retail location Methods to connect with customers: Person-to-person Party plan: A hostess invite friends to her place

COMPENSATION STRUCTURE OF DS ORGANIZATIONS Single-level is based on the markup between wholesale and retail prices. Multi-level earn income through sales to their direct customers or the direct seller earns a commission based on the sales of their down line.

II The Taiwan Direct Selling Industry

Direct Selling in Taiwan 264 DS companies in Taiwan TDS members account for 50% of DS revenues and 37% of DS employment Revenues in Taiwan  $52,0 billion in 2003

Total Retail Sales(2003): $1,860 billion 2.8% 97.2% Direct Selling sales All other retail sales

Direct Sales Penetration Rates – Asia, 2003 (thousands)

Taiwan Population and Employment Data, 2003 (thousands)

Taiwan Direct Selling Sales Force Growth, 1998-2003 (thousands)

Direct Selling Product Categories and Associated Revenues ($ in millions)

Characteristics of Direct Sellers

Characteristics of Direct Sellers

Economic & Fiscal Contribution

Direct Economic Contribution 2003 Statistics: 5000 employees in DS organizations 668,000 Direct Sellers 264 DS organizations – total revenue NT$52 billion Average annual commission $35,500

Supplier & Employee Spending Contributions Indirect Employee contribution: DS industry buys products and services from other Taiwanese businesses Induced Employee contribution: spending of income earned by direct sellers in retail and other sectors

Total Economic Impact Total Economic Impact = Direct + Indirect + Induced Income Multiplier (indirect and induced): additional $40.8 billion in Taiwanese personal income

Government Tax Revenue DS industry: $10.5 billion in tax collections Direct: $6.0 billion Indirect: $4.5 billion

Social Contribution of DS Industry

Work Experience of Sellers

DS Training 82% of direct sellers received training 50% trained by company 25% trained by upline 87% of direct sellers worked for only 1 DS company in the last 2 years 82% of direct sellers worked 12 months per year

Time Devoted to Direct Selling

Direct Selling Approaches

Benefits of Direct Selling Development of entrepreneurship Own your own business – while having assistance from a big company Independence Flexibility Socialize Improving professional skills

Development of Personal Skills: Self-esteem and confidence in other jobs and private life Financial Benefits: Income earned from DS most commonly used for daily expenses and improving quality of life Charitable Donations: $44 million given to charities

Satisfaction of Direct Sellers Very Satisfied 40% Somewhat Satisfied 31% Indifferent 10% Somewhat Unsatisfied 13% Not Satisfied at all 6%

Conclusion Contributions of DS: Economic – jobs, personal income, investment, and taxes Social – quality of life, personal skills, entrepreneurial skills (including women, uneducated, disabled, and low-income)