China – Country Profile

Population: 1.35 billion people (2010)

Land area: 3.7 million sq. miles (9.6 million sq. km)

Capital city: Beijing

Largest cities (by population, from most to least populous): Shanghai,

Beijing, Guangzhou, Shenzhen, Tianjin, Chongqing, Hong Kong, Dongguan,
Nanjing, Wuhan

Ethnic groups: Han (approx. 92% of national population), Zhuang, Manchu,

Hui, Miao, Uyghurs, Mongols, Tibetan, other

Languages and dialects: Mandarin, Cantonese, Wu, Hokkien, Sichuan,

Hainen, Shanghai dialect or Shanghainese (dialect of Wu Chinese), other

UNDP Human Development Index (HDI): 0.687 (101st in the world; 86.7%
increase from 1980 value of 0.368; UNDP HDR, 2011)

GDP: $6.988 trillion (world’s 2nd largest economy; Centre for Economics and
Business Research (CEBR) World Economic League Table, 2011)

GDP annual growth rate: 10.0% (1980-2009), 9.5% (forecast, 2011-2015)

GDP per capita (International $, PPP): $6,628 (2009)

Government System - Communist

Currency - RenMinBi (RMB) or Yuan , semi-flexible exchange rate

Languages - Mandarin, with Cantonese as the second most common

language

Ethnicities - Han ( 92% ) and 55 minorities (8%)

Religion - Buddhism, Islam, Taoism, Christianity

Cultural Analysis of Direct selling Industry in China

Incentive trip challenge. One of many sectors, including direct selling, that
successfully utilizes additional incentives to drive salespeople to reach targets is
incentive travel, which can take place locally or abroad. Trips offered as incentives are
renowned for motivating sales. Most DSOs schedule a few travels, both local and
abroad, during the year in order to meet their sales objectives. It should be stressed
that the trip destination has a significant impact on the incentive's appeal; international
destinations are favoured over domestic ones. These journeys represent appreciation
of past difficult labour, the chance to enjoy a wonderful travel experience, and
distinction. Sales managers utilize incentive visits to help their teams create short- to
medium-term objectives. When salespeople return from a vacation, they can talk about
their experiences to inspire others to join them on upcoming excursions. As a result,
the direct selling sector can now operate profitably.
Higher adoption rate for internet. The COVID-19 pandemic has had a wide range
of effects on social behaviours. In the past three years, a lot of research have been
undertaken in several fields, including online learning, purchasing patterns, online
gambling, eating patterns, food delivery, sexual preferences, and lifestyle
modifications. cite the likelihood that widespread home imprisonment and quarantine
restrictions in China will have a negative emotional impact. found that Chinese people
spend more time online and had a higher dependence on the internet. Because
individuals have stayed in during the pandemic, staying home instead of going out,
shopping online, and avoiding social interactions, overall e-commerce sales have
grown. Chinese individuals have minimised going out or in-person meetings
unnecessarily as a result of social distance. Salespeople who do their business (both
recruiting and selling) more frequently in person are therefore more likely to be
negatively impacted by the shift in behaviour. A higher adoption rate will be observed
for those who already use or want to use more online platforms to conduct meetings,
training sessions, and events. It is also likely that online resistance selling will
decrease.
Increasing health awareness. Since "Healthy China 2030" was introduced in
October 2016, the large health industry has seen significant growth. According to the
World Health Organization (WHO), the human immune system is our best line of
defence against the pandemic. Public knowledge of healthcare has increased during
the COVID-19 pandemic. Due of this, food supplements sales during the pandemic
increased significantly despite the difficult economic climate. In the following two
years, the Chinese health supplement market is anticipated to rise by a high single-
digit rate (media Research, 2021).
Negative opinion of the public. Public attention was drawn to unfavourable news
about China's direct selling business throughout the 100-day operation. It was more
challenging to sell healthcare items and hire new salespeople in 2019 due to the
current subpar grasp of the sector. Chinese consumers could not have completely
forgotten about the incident even if it has been three years. The tail end outcome may
remain.
These are some of the culture of business in China

1. Relationships & Communication

• The Chinese don't like doing business with companies they don't know,
so working through an intermediary is crucial. This could be an individual
or an organization who can make a formal introduction and vouch for the
reliability of your company.
• Before arriving in China send materials (written in Chinese) that describe
your company, its history, and literature about your products and
services. The Chinese often use intermediaries to ask questions that
they would prefer not to make directly.
• Business relationships are built formally after the Chinese get to know
you.
• Be very patient. It takes a considerable amount of time and is bound up
with enormous bureaucracy.

2. Business Meeting Etiquette

• Appointments are necessary and, if possible, should be made between
one-to-two months in advance, preferably in writing.
• If you do not have a contact within the company, use an intermediary to
arrange a formal introduction. Once the introduction has been made, you
should provide the company with information about your company and
what you want to accomplish at the meeting.
• You should arrive at meetings on time or slightly early. The Chinese view
punctuality as a virtue. Arriving late is an insult and could negatively
affect your relationship
• Pay great attention to the agenda as each Chinese participant has his
or her own agenda that they will attempt to introduce.

3. Business Negotiation
• Only senior members of the negotiating team will speak. Designate the
most senior person in your group as your spokesman for the introductory
functions.
• Business negotiations occur at a slow pace.
• Be prepared for the agenda to become a jumping off point for other
discussions.
• Chinese are non-confrontational. They will not overtly say 'no', they will
say 'they will think about it' or 'they will see'.
• Chinese negotiations are process oriented. They want to determine if
relationships can develop to a stage where both parties are comfortable
doing business with the other.

4. What to Wear?
• Business attire is conservative and unpretentious.
• Men should wear dark coloured, conservative business suits.
• Women should wear conservative business suits or dresses with a high
neckline.
• Women should wear flat shoes or shoes with very low heels.
Economy analysis of direct selling industry in china

The availability of cheap labour in China is one of the factors that lead many
multinational corporations to produce their goods there. Although cheap labour is a
significant source of competitive advantage for China, some experts believe that the
country's rapid economic expansion has also resulted in a rapid rise in salaries. Its
average wage now exceeds those in Argentina, Brazil, and Mexico after a large
increase. Does this signal that China's era of cheap labour is over? There are differing
opinions among analysts, thus there is no unified stance on this issue.
China is the largest foreign investor. Over time, several nations have received its
foreign direct investment. Some of the nations where its investment has been
remarkable include the US, the UK, Australia, Pakistan, Bangladesh, Indonesia, the
UAE, Venezuela, Argentina, Angola, Chad, and Niger. Numerous nations have
already expressed support for its multibillion-dollar Belt and Road Initiative (BRI),
which aims to connect Asia, Africa, and Europe.
It is important to note that China portrays itself as a wonderful destination for foreign
direct investment thanks to its affordable labour and enhanced infrastructure (FDI). In
fact, it has surpassed the USA to become the world's top recipient of new FDI (BBC,
2021). The standard corporate income tax rate in China is 25%; however, for qualified
enterprises that operate in government-supported industries, the rate may be reduced
to 15%. The rates for personal income taxes range from 3% to 45%.

China’s Economic Policy

The country's growing integration into the global economy and the government's
courageous support for economic activity were the key drivers of the recent economic
boom. The country's remarkable economic and social development, which let
hundreds of millions of people escape poverty, has come with numerous hurdles, too.
In order to preserve the viability of the nation, the new administration led by President
Xi Jinping will need to address serious economic imbalances, growing environmental
problems, expanding economic disparity, and an ageing population.

China’s Trade Structure

Since 1993, China has continuously had a trade surplus. In just three decades, global
trade increased by about 100 times to USD 4.2 trillion, and China overtook the United
States as the world's largest trading nation in 2013.The government's extensive
investment initiatives and the country's opening have caused it to develop into a
significant manufacturing centre. In particular, after China joined the World Trade
Organization in 2001, this environment encouraged trade expansion. The nation has
benefited from a consistent improvement in its terms of trade since 2000 as a result of
its economy's high degree of integration into the world trade system. However, the
country's manufacturing production was reduced as a result of the global economic
slowdown in 2008–2009, which had a negative impact on China's trading industry.
Negative Factors of economic analysis of Direct selling Industry in China during
pandemic
Greater demand for income opportunities and lower disposal income. The globe
had entered a new cycle of the global economic crisis as a result of the unanticipated
impact of the COVID-19 epidemic. Numerous nations' economies were adversely
impacted. China's economy is severely impacted by this global pandemic even though
it managed to grow its Gross Domestic Product (GDP) by 2.3%, reaching USD14.72
trillion in 2020 (The World Bank, 2021), whereas most other nations experienced a
decline. The wholesale-retail commerce sector, the transportation-storage-post
sector, and the accommodation-food-beverage service sector are the most fragile
sectors, suffering from a negative production of 14.6%, according to Duan et al.
(2021). Millions of individuals lost their jobs as a result of the pandemic's forced closure
of tens of millions of small and medium-sized businesses (SMEs) (Dai et al., 2021).
According to Dai et al. (2021), COVID-19 had a significant impact on Chinese SMEs
in a variety of ways across a wide range of industries and geographical areas. The
pandemic's continuous nature makes it difficult to quantify the economic risks (McKee
et al., 2020). Declining disposable income and increased demand for alternative
earning options to make up for lost revenue are the primary effects of this economic
events.
Major unemployment. The Chinese government had begun to act against
monopolistic practises in accordance with its strategic objective of promoting universal
prosperity. As a result, other sizable e-commerce giants, including Alibaba, Tencent,
Didi, Ele.me, and Youku, intend to implement significant layoffs this year. Several large
e-commerce enterprises, including Baidu, iQiyi, and Kuaishou, began their significant
cutbacks last year and will finish them in 2021. It is undeniable that this has made the
already difficult unemployment situation even worse. While this results in a decrease
in disposal income, it also gives DSOs the chance to hire salespeople to advance their
brands and goods. In times of economic crises, the direct selling sector has historically
acted in the opposite way.
Disruption of the supply chain. With a few exceptions, the things that DSOs sell in
China are domestically produced. This is due to one of the requirements for acquiring
a direct selling licence being the presence of local manufacturing capabilities. The
ingredients might come from anywhere in the world, even though some goods are
made in China. Prior to COVID-19, the majority of DSOs already have a reasonably
robust supply chain management system in place. It has been highlighted that a
steady supply chain guarantees that salesmen have enough inventory to sell. COVID-
19 broke this stability. Businesses' routine production and operations have been
significantly impacted by the unanticipated COVID-19 outbreak. Supply chain
disruptions have occurred in almost all industries. The COVID-19 epidemic disrupted
supply chains and had a negative impact on global trade and the economy. Factory
closures and value chain disruptions are causing problems for many organisations in
terms of obtaining resources and meeting demand. In the domestic market, supply
chain interruptions mainly cause temporary disruptions. No DSO can avoid being
affected by this disturbance. Product delivery has been impacted over the past two
years whenever new COVID-19 cases have been confirmed, giving customers a
negative shopping experience.
Market Analysis of Direct selling

Nature of Market

The Company sells products and services directly to consumers, away from a fixed
retail location. It mostly markets its products through independent sales
representatives’ person to person

Marketing requirement

In 2005, the Chinese government enacted a law called Regulation of Direct Sales and
Regulation on Prohibition of Chuanxiao (Chuanxiao stands for MLM).

With this regulation, China makes clear that while Direct Sales are permitted in the
mainland, MLM is not.

Even if it is permitted, Direct sales must follow some rules. The company is required
to:

• have a business license;

• only pay out one level of commission;
• offer an advanced training course to sellers, where they have to get a license
by the end of the course; and
• direct sellers must wear a badge to prove their status.

The target Customer

The target customer for this direct selling industry will be the youngster because
nowadays the youngster are the most number of using highly technology gadgets like
smartphone, laptop and extra with the support of youth large population the business
can grow up easily

The Competitive environment for Direct selling industry in China

Intense competition from online competitors. There is no turning back now that the
internet and e-commerce have established themselves in China in the 2000s. The
digital economy made for 38% of China's GDP in 2020. 780 million Chinese internet
users contributed more than 50% of all e-commerce retail sales in 2021. (Ma, 2022).
China's e-commerce is anticipated to reach CNY21.4 trillion (US$3.3 trillion) in 2025,
according to GlobalData (2021). China's e-commerce is anticipated to see growth
thanks to the expanding 5G coverage (Pisarov et al., 2020). Wechat merchants and
social commerce companies are two new business models that the e-commerce
ecosystem, supported by technological development, has nurtured. These models are
in some ways direct competitors to DSOs because they provide consumers with
similar product categories as well as business opportunities for income.
The introduction of live streaming commerce (Xu et al., 2020) has further heightened
the stress caused by rivalry in the consumer market. There have been numerous DSO
attempts to use technology and these social behaviours to compete, but there have
only been a few modest successes. The ideal integration model has not yet been
identified. Additionally, the rising acceptability of online activities and greater 5G
coverage extension are projected to provide DSOs with significant opportunity to
further grow their online presence.

THE PLAN

Customer Satisfaction

By improving their customer service initiatives, direct sales agents can boost sales.
Customers that are happy are more likely to recommend a product or service to their
friends and family. The inverse is also accurate. Poor customer service results in
product returns, refund requests, and a generally negative reputation. Customers
can be kept happy by direct sales reps using good customer service techniques.
Throughout every engagement, keep the needs of the client in mind. Other
techniques to enhance customer service include comprehending clients' wants,
responding quickly to client difficulties, and following up with clients to assure their
complete satisfaction.

Marketing Efforts

By extending marketing and promotion efforts, direct sales agents can boost sales.
While conventional advertising strategies like print media can be somewhat effective,
they may fall short in reaching the growing number of consumers who utilise
electronic and social media to learn more about goods and services. With the help
of technological equipment like social media websites, mobile phones, and
interactive handheld media devices, vendors and customers can communicate with
one another through social media marketing, which is a cost-effective advertising
strategy. By utilising new technological advancements, sellers may reach a larger
audience of consumers.

Training and Development

Old sales methods that depended on cold calling and hard closes are no longer as
effective as they once were due to changes in the business environment. Through
training and development initiatives, direct sales people can enhance their ability to
close deals and boost sales. By emphasising the value proposition of the goods and
services supplied, training programmes aid in the improvement of sales abilities.
Programs are designed by training administrators based on the requirements and
levels of experience of individual sales people.
Cross-Sell

Cross-selling strategies can increase sales for direct sales professionals. Offering
customers extra goods or services that enhance the original product offered is known
as cross-selling. Customers might not be familiar with the full range of products. By
cross-selling, you can introduce customers to new products while also raising the
average sale amount.

The expected Budget list for direct selling industry.

My Product Quarter 1 Quarter 2 Quarter 3 Quarter 4

Forecasted 300 500 400 1000

unit sales
Price per unit ¥ 45 ¥ 50 ¥ 50 ¥ 50

Total ¥ 1,000 ¥ 1,250 ¥ 1,500 ¥ 1,500

expenses
Total Gross ¥ 12,500 ¥ 23,750 ¥ 18,500 ¥ 48,500

Sales ¥ 1,000 ¥ 1,500 ¥ 1,000 ¥ 2,000

discounts
Total net ¥ 11,500 ¥ 22,250 ¥ 17,500 ¥ 46,500
sales