Amway Brand diversification in China

By AMY CHEUNG
Published: February 05, 2007 05:28 PM

Amway China received its direct sales license in December, 2006, and now the company is using
localized sports sponsorships, and charity, education, and public relations campaigns to build up
its brand.

Sports Sponsorships

On January 18th, Amway announced that it signed Liu Xiang, who won a gold medal for China in the
110m hurdles at the Athens Olympics in 2004, to be a spokesperson for its global brand, Nutrilite.
This deal marks the first time Amway has selected a spokesperson from Asia for its global brand.
Amway (China) Co Vice President Yan Zhirong said that Liu Xiang embodies Nutrilite's philosophy
that health can lead to a bright future.

According to Amway (China) Co Ltd chairman Li Jinfen, Amway China has been striving to break
away from traditional marketing tactics commonly used by overseas direct sales companies.
Amway hopes to build its brand through localized advertising and public relations campaigns.

Amway is also moving beyond simply emphasizing product characteristics in their advertising by
connecting products with specific mottoes and philosophies. The brand philosophy for Nutrilite,
for example, is closely connected to nutrition and a healthy lifestyle. Continuous research shows
that sports marketing can be successful and that a product's consumer base increases when the
product is connected to a philosophy.

Amway rarely conducts mass advertising campaigns overseas, and instead sells products through
conventional direct sales. However, as Chinese consumers remain loyal to advertisements, Amway
has decided to do as the Chinese do. In 2001, Amway hired Chinese Olympic Diving medalist Fu
Mingxia to endorse Nutrilite and participate in an advertising campaign to widen consumer
recognition. In 2004, to complement Nutrilite's changing promotional theme, Amway strengthened
Nutrilite's brand image by harnessing Olympic diver Tian Liang's easy-going image and increasing
celebrity. In July, 2006, Amway brought in Chinese basketball player Yi Jianlian to further enhance
Nutrilite's image.

By hiring so many Olympic athletes as spokespersons, sponsoring an Olympic documentary,

producing and allocating Olympic-themed television commercials, Nutrilite is working hard to
associate its brand with the Olympics. In 2000 and 2004 Nutrilite was the exclusive brand of
nutritional supplements employed by the Chinese Olympic team.

Since the NBA began hosting games in China, it has gained popularity and influence in the country.
Thus, to consolidate its branding efforts, Amway joined with the NBA to make its promotional
strategy more basketball-oriented. In 2005, the two parties held teenage NBA games in China for
thousands of Chinese students.

Charity and Education Campaigns

Amway China employs charitable and educational campaigns to create a socially responsible brand
image that appeals to Chinese consumers.

Beginning in 2002, Amway has exclusively sponsored Shanghai's Fitness Run, which has won over a
positive media environment for the company's sales team. In September 2005, the event was
renamed the Amway Nutrilite Run for Health (Amway RFH) Amway's RFH has been held for five
consecutive years, and has helped build up Nutrilite's image association with health, fitness, and
charity. In the past few years, Nutrilite has supported the Amway RFH through print, broadcasting,
television, and Internet and outdoor media, and has turned the event into a large scale marketing
event.

Over the past decade, Amway (China) has organized and participated in 1811 charitable events
across the country, giving 126 million Yuan (US$17 million) to various events. Since 2002, Amway
has provided cleaning equipment, Nutrilite health supplements, and funding or research conducted
by the Polar Research Institute of China. In 2004, Amway organized an event that allowed a group
of environmentalists to pick up the trash left behind by those who have scaled Mt. Everest. This
effort to build an environmentally-friendly brand image was selected as one of the top ten public
relations campaigns of 2004 by the China International Public Relations Association.

Amway also sponsors educational projects: Since the second half of 2003, the company has given
30 million Yuan (US$3.75 million) annually to extend the famous high schools in east China.

The Marketing of Artistry

Nutrilite's success at brand building serves as an example for Amway's cosmetics brand, Artistry.
The company has made numerous efforts to connect the brand with the arts. From July 2004 to
March 2005, Artistry exclusively sponsored the musical The Phantom of the Opera, and has
launched a new cosmetic line, Christine's Choice, named after the musical's leading actress. Brand
and image displays were established in the Shanghai Grand Theater, and the musical's main actors
and actresses used Artistry cosmetics. According to Amway East China, Artistry's brand promotion
was first launched in Shanghai, with 14 large road shows in high-end commercial districts,
including Xujiahui, to deepen consumer awareness about Artistry's role in the musical.

Amway (China) also backs its brand building with international products, with standardization being
carried out in Amway's US laboratories. Amway (China) has launched 140 types of products on the
Chinese market, with the Ministry of Commerce approving direct sales of 22 health foods, 138
cosmetics, and four types of cleaning equipment. Amway recently opened its first overseas global
research and development center in Shanghai's Zhangjian district, with the aim of developing
Chinese herbal medicines, biological technology, and localized lifestyle products.

Amway now has 188 stores in more than 150 cities in China, and still operates through franchises
in areas where they have not yet received direct sales licenses. It has invested more than US$200
million in China during the last ten years, and revenues from China accounted for US$2 billion of
the company's global revenues of US$6.4 billion in 2005.