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Opportunities and Challenges for Direct Selling Operations in China Harry Yeung Caring International (Hong Kong) Ltd. September 30, 2003
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Since 1888 Third & Fourth Generation Founder Second Generation
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Nanshui, Zhuhai, 1888
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Headquarter: Hong Kong
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Business of LKK Group Health Business Sauce Business
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Health Business - LKK Health Products Group - Caring International - Guangdong Nanfang Lee Kum Kee
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Guangdong Nanfang Lee Kum Kee Approved as direct selling company in 1996 Stopped direct selling in 1998 Adapted wholesaling and retailing in 1998
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History of Direct Selling in China – (1) Late 80’sDirect selling started 1995Ban of direct selling 1996Reopen direct selling & approved 41 companies
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History of Direct Selling in China – (2) 1998Ban of direct selling 1998Conversion regulations & approved 10 companies with new operation model
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Opportunities – (1) - Drafting of direct selling legislation is underway to fulfill China’s WTO commitment on sales away from a fixed location
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Opportunities – (2) - One of the world’s fastest growing economies - GDP grew from approximately RMB7.8 trillion in 1998 to reach RMB10.3 trillion in 2002, representing a CAGR of 7.3%
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Opportunities – (3) Population (billion) Urbanisation rate (%) Source: China Statistical Yearbook 2002
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Opportunities – (4) - A sizeable affluent group better education possess credit card / mobile phone / digital camera international travelling care for health and beauty willing to take up learning and money-making opportunities
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Opportunities – (5) - Social and political stable - Expanding elderly population - Many entrepreneurs
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Challenges – (1) - Future direct selling legislation will be drafted according to China’s characteristics
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Challenges – (2) - Poor social image due to confusion with “Chuan Xiao”
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Challenges – (3) - Entry barriers set up own manufacturing plant guaranteed deposit overseas distributors were not allowed
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Challenges – (4) - Business regulations keep changing
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Challenges – (5) - Severe competition anticipated - Ineffective self-discipline
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Tips for Survival Live in China, among Chinese Localization of employees Learn by mistakes Manage external variables carefully
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Tips for Sustaining Strengthen government relations Be flexible and proactive in making changes
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Thank You !
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