Amway: Selling dreams in India

The Athens News/June 30, 2003
By Jim Downing

Rajkot, India -- At a sold-out Amway rally here in agricultural Western Gujarat, Yogish Taneja walks onstage, hand in hand with his wife, to the William Tell overture. He does a little dance, grabs a microphone, pumps his fist in the air, and yells, in English, "Freedom!"

For 90 minutes, Taneja, a round man in his 40s, shares anecdotes on the importance of perseverance, recounts details from his latest cruise and describes how he built an Amway network of 50,000 distributors from scratch. He peppers his Hindi with English buzzwords: "business opportunity," "dreams," "success," and "are you excited?"

At events like this all over the country, Amway sells the promise of American-style business opportunity to middle-class Indians hungry for a chance to escape the bounds of their domestic economy.

"At my job I make 22,000 rupees per month (about $465)," says Haresh Pandya, 43, a statistics professor and Amway distributor from Junagadh, three hours by bus from Rajkot. "That is not enough for my dreams," he says.

After a year in Amway, Pandya has made no profit, but remains enthusiastic: "I will tell you the potential of this business," he continues. "After seven, 10, maybe 12 years, you will purchase a jet plane from this Amway! Because there are more than 500 persons in America who have their own jet planes, from Amway only."

Though Amway has been operating in Asia since 1984, protectionist economic policies kept direct-selling companies out of India until 1998. The Amway pitch found an eager audience here. By 2001, nearly 500,000 distributors had signed up.

As Amway has globalized -- two-thirds of its revenue now comes from Asia -- its business model has changed little. Founded in Grand Rapids, Mich., in 1959, Amway still sells household products, cosmetics and dietary supplements through a hierarchy of distributors who receive a fraction of the sales of those in the network beneath them. Each newly recruited distributor pays Amway a startup fee -- about $100 in India.

Half of Amway distributors in India are women. The company promotes itself as a business opportunity for middle-class women with broad social networks, but few marketable job skills.

"For me this was a chance to do something different besides just staying at home cooking and talking to other wives and taking care of children," says Meena, 45, a Delhi homemaker and Amway distributor for 10 months in 2000, who asked that her real name not be used. "And of course I was thinking I would be making lot of money."

"I have so many friends and relatives, so I was thinking it would be easy," she continues. "But I was running around from 8 in the morning until 10 at night for Amway, and I couldn't take care of my family. My network collapsed, and in the end I didn't make any money at all."

Indeed, away from the giddy Rajkot meeting, success stories are hard to find.

Omkurdas Laskari, 59, a friend of Pandya's from Junagadh, has built a network of only two distributors in 10 months, but has spent $200 on training materials, instructional meetings, and a trip to see a speaker in Mumbai. His pension as a retired clerk pays less than $100 per month. "My wife is not happy," he says.

Amway's Web site says 3.6 million people in 80 countries and territories are "taking advantage" of Amway business opportunities. The company says some rewards are financial but "others are intangible," including "peer recognition, pride in achievement and the joy of helping others."

In China, where Amway opened operations in 1995, the government has since 1998 implemented regulations to check what it deemed the direct-selling industry's tendency to take advantage of the financially insecure. Companies like Amway must now open retail outlets rather than sell person-to-person, and company events must be officially sanctioned.

The Indian government has no such plans to hobble direct-selling companies, says Dr. Vijay Kelkar, adviser to the minister of finance. "Amway may be giving some chance to be in business for people who otherwise would not have it. Probably it is good for housewives."

Even without government regulation, the Indian Amway boom seems to be playing itself out. After three years of 100 percent annual growth, Amway sales rose by only 25 percent in 2002. High prices are probably part of the explanation. At $33 for 1.1 pounds of protein powder or $17 for a half-ounce of eye cream, Amway products are simply not competitive.

"If someone can buy an international brand toothpaste for 30 rupees ($0.64), they're never going to pay three times that for Amway toothpaste," says Tom Wenscott, 34, a software consultant from Shillong, in Northeast India.

"But still," he says, "so many people have tried Amway. What does that show? I guess that in any culture people want a chance to be wealthy."