Economists, politicians, and shoppers focus so much on the massive flood of Chinese imports that we end up paying too little attention to the products, services, and business concepts exported from the United States to China.
The vast differential in income between the United States and China has precluded a rampant growth in U.S. exports to China. U.S.-made cars, American doctors, and steakhouses remain far too expensive to appeal to the typical Chinese consumer.
But plenty of U.S. brands have found China to be fertile ground, especially down-market brands that are able to position themselves as aspirational, premium (but not too premium), somewhat affordable products for China’s vast and growing middle class. In America, interest in direct-selling tends to decline among higher-income consumers. But the experience of Mary Kay, the iconic, middle-American direct-sales cosmetics firm, proves that an American direct-sales firm with Chinese characteristics can do quite nicely.
The pink-themed company is a big deal in what Americans used to call Red China. Mary Kay China’s headquarters occupy four stories in Tower 2 in Plaza 66 Shanghai’s fancy mixed-use complex with high-end stores such as Fendi. The spotless, high-gloss offices are filled with images of the bejeweled, heavily made-up Ash and her many maxims in both English and Mandarin, as well as information about the company and its history, beliefs, and values. (There are a few slight changes. A reference to God is changed in Chinese to a more anodyne statement about faith, for example.)
Mary Kay did not have any easy transplant to China upon its arrival in the mid-1990s. Direct-selling didn’t catch on rapidly in a country where knocks on the door could signal something far less benign than the offer of a new moisturizer. And in the Wild West days of early Chinese capitalism, pyramid schemes and Ponzi schemes thrived. When direct-selling was banned in 1998, May Kay retrenched and changed its model. It set up showrooms around the country, paid agents to represent the products, and maintained corporate control of the inventory. In 2006, however, a new law permitted direct-selling. Sales directors must have fixed locations and licenses. And selling in homes is still frowned upon. The company maintains 35 showrooms around the country.
Logo from Mary Kay