直销行业分析报告(ppt 42) .ppt

InsightsintoDirectSellinginChina June2010 IntroductionChineseDirectSellingintheGlobalContextFrameworkofDirectSellinginChinaCategoryPerformanceCompetitiveLandscapeFutureProspectsDefinitions Scope Introduction Thisbriefingontheglobalretailingmarketcoversthefollowingchannels focusingontheyear2009 Thecoreobjectiveofthisreportistoexaminethecurrentstateofthenon storeretailingchannel anddirectsellinginparticular inChinainthecontextofthewiderretailmarket Inadditiontoprovidingachanneloverview thereportalsoanalysesperformancebyproductsector andthestateofthecompetitivelandscape keytrendsanddevelopments andprospectsandopportunities ThedataandanalysisarespecifictotheChinesedirectsellingchannel andwhereappropriateandrelevantitlooksatgreaterdetailinbeautyandpersonalcareandconsumerhealthcare Thedirectsellingchannelisexaminedintermsofforecastperformanceoverthe2009 2014period withacloserlookat2009 2010specifically identifyingkeyareasofopportunityintermsofproductsectors Objectives Introduction Directsalesdominatenon storesalesinChina ChinaisthefourthlargestdirectsellingmarketgloballyreachingsalesoverUS 6billionin2009 withthedirectsellingchannelaccountingforthemajorityofnon storesalesinthecountry Vitaminsanddietarysupplementsremainthebiggestcategory 56 ofalldirectsalesinChinaaregeneratedbythegrowingvitaminsanddietarysupplementproductssector Amwaymaintainsaclearleadingposition Amwayaccountsfor46 ofalldirectsalesinChina andisbyfarthebiggestplayer Contributortogrowth ChinawasthebiggestcontributortogrowthinAsia Pacificin2009 addingUS 500millioninsales andwassecondonlytoBrazilglobally Legalframeworksupportsgrowth Implementationofdirectsellinglegislationhasspurredgrowthsince2005 andcreatedastableandmoresecureenvironmentforcompaniesandconsumers Foodanddrinkproductsarethehottest Foodanddrinkproductssawthehighestgrowthratesoverthereviewperiod peakingatover500 in2006 ThehighgrowthhascomemainlyfrommealreplacementproductslikeHerbalifeProteinMix Pricepremium Productssoldbydirectsellersaretypicallymid tohigh endcomparedwiththoseofstore basedretailers Leadingdirectsellingplayers suchasAmway MaryKayandHerbalife areallpositionedatthemidtopremiumendofthemarket KeyFindings Introduction IntroductionChineseDirectSellingintheGlobalContextFrameworkofDirectSellinginChinaCategoryPerformanceCompetitiveLandscapeFutureProspectsDefinitions ChineseDirectSellingintheGlobalContext DirectSellingInChina AmwayAccountsfor46 ofalldirectsalesinChinaandisbyfarthebiggestplayer 56 4 OfalldirectsalesinChinaaregeneratedbythegrowingvitaminsanddietarysupplementproductssector 6 1bnChina sdirectsellingmarketisnowthefourthlargestglobally Followingtheunprecedentedcontractioninspendingduring2009 retailexpendituregrowthstalledtolessthan1 globally Incontrast China sretailsalesgrewwellovertheaverageforAsia Pacific andtheincreaseof8 markedonlyaslightslowdownonpreviousyears Thestronggrowthinnon storesaleswasevenmoreimpressive asthechannelwasmoredynamicthantotalretail groceryandnon groceryretailersalike growthinsalesofwhichsloweddownduring2009 to6 and9 respectively China sGrowthRemainsStrong ChineseDirectSellingintheGlobalContext RetailingMarketSnapshot Totalretailsalesin2009reachedUS 10 4trillionAsia PacificretailingmarketwasworthUS 2 7trillionChinesemarketwasvaluedatUS 0 9trillion Globally Internetretailingisthebiggestnon storechannelandthefastestgrowingone TotalInternetretailingsalesreachedUS 244billionin2009 upby5 despitethelessfavourableeconomicconditions InChina directsalesarebyfarthemostimportantnon storechannel with60 ofallnon storesalescomingfromdirectsales Non storeinFocus ChineseDirectSellingintheGlobalContext DirectSalesasShareofTotalRetailSales ChineseDirectSellingintheGlobalContext DirectSalesasPercentageofTotalRetailLessthan0 5 Between0 5 and1 Between1 and3 Over3 IntroductionChineseDirectSellingintheGlobalContextFrameworkofDirectSellinginChinaCategoryPerformanceCompetitiveLandscapeFutureProspectsDefinitions ChinaisthesecondbiggestretailmarketinAsia Pacificandthesecondfastestgrowingmarket withthehighestcontributiontooverallgrowthinactualterms DirectsalesinChinarosebyUS 500millionin2009 makingitthebiggestcontributorintheregion Asiancountriesshowgreataffinitytothedirectsaleschannel anditispopularbothindevelopedcountrieslikeJapanandindevelopingcountrieslikeChina Directsalesareparticularlystronginmarketswithlessdevelopedretailsystem ascataloguesandagentscanreachremoterurallocationslackingretailinfrastructureeasilyandcheaply China BiggestContributortoGrowthinDirectSelling FrameworkofDirectSellinginChina In2005and2006 manyoftheleadingdirectsellingcompaniessaleswerenegativelyimpactedbythenewregulations TheleadingplayerAmway forexample sawsalesdeclinesharplybetween2005and2006 Resultsoftheregulatorychanges Consolidationwithintheindustry Increasingdifficultenvironmentforsmallerplayerstooperatein Single levelmarketingisnowthemostprevalenttypeofdirectselling China sdirectsellingmarketishighlyregulatedcomparedwithothercountriesintheAsia Pacificregion Thisisasaresultofgovernmentregulationondirectsellinginlate2005 Theregulationsforbidmulti leveldirectselling alsoknownaspyramidselling DirectsellingcompaniescarryingoutactivitiesinChinaarerequiredtoapplyforalicencefromtheMinistryofCommerce Togetalicence companiesneedtofulfilatleastfourimportantrequirements LegalFramework FrameworkofDirectSellinginChina Directsalesregulationsrequirements RegistrationcapitalofnolessthanRMB80million CapitalreservesaboveRMB20million Monthlypaymentfordirectsalespersonnel andcapsonbonuspayments Specialretailoutletsinregionswherethecompanyhasdirectsellinglicencetoprovideeasyaccesstoprices refundsorotherservicesforconsumersanddistributors Person to person Directsellingpersonnelcanprovidedetaileddescriptionsanddemonstrationsoftheproductstheysell offeringtailoredservicetoconsumers Convenience Directsellerscansellanddelivertheproductsatthehomesoftheircustomers whichisconvenientforbusyconsumers Unprofessionalmanner InChina asmanydirectsellingpersonneltendtobelesseducated theylackskillinpresentingthemselvesinaprofessionalmanner Perceivedaspushy Inundergroundstationsoflargecities suchasShanghai frequentencounterswithdirectsellingpersonnelfromdifferentcompaniescanleadtoimpatienceamongcommutersandanegativeimpressionofdirectsellingasaformat whichwillhaveanadverseimpactonthecompanyorbrandthepersonnelrepresent ConsumerPerceptions FrameworkofDirectSellinginChina ByJuly2009 24companieshadlicencestooperateasdirectsellersinChina Between2008and2009 fourcompaniesreceiveddirectsellinglicences Amongthefournewplayers HarbinPharmaceuticalGroupandJiangsuLongliqiGroupCoLtdarealreadystronginstore basedretailing anddirectsellingisintendedtobeacomplementarydistributionchannel JiangsuAlpayBiotechCoLtdandHarbinPharmaceuticalGrouparemainlyengagedinvitaminsanddietarysupplementsdirectselling whileKelti China DailyNecessitiesCoLtdandJiangsuLongliqiGroupCoLtdfocusonbeautyandpersonalcare DirectSalesin2009 FrameworkofDirectSellinginChina Directsalesofhomefurnishingsandhousewaressaw40 valuegrowthbetween2008and2009 Thefoodanddrinksectorgrewata128 CAGRbetween2004and2009 ThisrapidgrowthcamemainlyfrommealreplacementproductslikeHerbalifeProteinMix Vitaminsanddietarysupplementswasthebiggestactualcontributorbetween2004and2009 withanincreaseofRMB4 4billion Directsalesdynamicsoverthelastfiveyears FrameworkofDirectSellinginChina IntroductionChineseDirectSellingintheGlobalContextFrameworkofDirectSellinginChinaCategoryPerformanceCompetitiveLandscapeFutureProspectsDefinitions Homefurnishingsandhousewarescategorysawthestrongestgrowthindirectsellingin2009 Inlate2008 Amwaylaunchedhigh endcookingutensilproductsundertheAmwayQueenbrand Bymid 2009 theindustrywasdescribingthislaunchassuccess Thehighvaluesalesachievedbythissectorisinlargepartbasedonhighunitprices SinglesetofcookwareproductsretailatapriceashighasRMB6 000 HouseholdGoodsEntertheMarket CategoryPerformance Source A Domesticelectricalappliancesdirectsellingunderperformedthemarketin2009 VorwerkistheonlydirectsellerofferingsuchproductsviadirectsellinginChina Thelimitedproductchoicehashamperedsales Accordingtoindustrysources vacuumcleanersaretheonlyproducttypeavailablewithinthiscategory andmanyconsumers especiallyinruralChina perceivevacuumcleanersasaluxuryproductratherthananecessity VacuumcleanershavealowpenetrationinChina lowerthanotherappliancessuchaswashingmachines fridgefreezersandairconditioners Unitpricesforthesevacuumcleanersareveryhigh ataroundRMB3 000perunit Inthecurrentmarketcontext itisunlikelythattherewillbeanydynamicgrowthforthissectorindirectsellinginChinainthenearfuture LimitedProductRangeinConsumerAppliances CategoryPerformance CleaningApplianceSeriesVK35CleanHostDailyfloorcleaningcare aswellAsabovegroundfurnishingscleaningdust CleaningApplianceSeriesEB351DeepCleaningMachineDeepcleaningcarpets mattressesandotherfabricsinhibitthepropagationofdustmitesandreduceallergens Productssoldbydirectsellersaretypicallymid tohigh endcomparedwithstore basedretailers Theproductsoftheleadingdirectsellingplayers suchasAmway MaryKayandHerbalife areallpositionedinthemiddletopremiumpricerange DirectSellersMaintainaPremium CategoryPerformance In2009 vitaminsanddietarysupplementsaccountedfor56 ofdirectsalesinChina In2009 directsalesofVDSgrewby9 ThiswasmorethandoubletheoverallgrowthofthesectorinChina 4 Amwayistheleadingplayer with16 ofvaluein2009 upfrom14 in2008 Healthygrowth aswellaslucrativeprofitmarginsindirectselling havealreadyattractedmanytraditionalmanufacturerstoapplyforlicencestoextendtheirbusinessesintothischannel TraditionalVDSplayersareenteringdirectsalesandapplyingforlicences Betweenlate2008andearly2009HarbinPharmaceuticalGroupandJiangsuLongliqiGroupCoLtdobtainedlicencestooperateviadirectselling TheVDScategoryisrelativelynewandrequireson siteperson to personexplanationoftheproducts benefits Thedirectsellingchanneliswellplacedtomeetthisneed VDSDirectSalesContinuetoAttractsNewPlayers CategoryPerformance StoreSalesSufferedin2009 CategoryPerformance In2009 asaresultoftheaggressiveexpansionofdirectsellingplayers suchasAmway InfinitusandHerbalife bricks and mortarstoresalesofvitaminsanddietarysupplementssuffered Directsalesgrowth 8 8 BeautyandpersonalcareisthesecondlargestcategorywithindirectsalesinChina DirectsalesofbeautyandpersonalcareamountedtoRMB16billionin2009 TheinternationalplayersAmway AvonandMaryKaydominatedirectsalesinthecategory Skincarewasthemostimportantcontributortocategorysalesin2009witha60 shareofvaluesales Colourcosmetics haircareandbathandshowerarealsoimportantcontributorstosales BeautyandPersonalCareDirectSales CategoryPerformance Furthertotherightcategorieswithmuchstrongergrowthindirectselling deodorantswith32 skincarewith21 andcolourcosmeticswith14 AlltheseproductshavealsoahighshareofdirectsalesinChina BeautyProductsGrowthandShares CategoryPerformance Note Sizeofthebubblerepresentspercentageshareofdirectsellingincategorysales ThebubbleforMen sgroomingcategoryistoofarontherighttofitontothechart duetoexceptionallystronggrowthrate Men stoiletriessuchasmen sskinandhaircareareanewandexcitingterritoryforpersonalcareindustryplayers IntroductionChineseDirectSellingintheGlobalContextFrameworkofDirectSellinginChinaCategoryPerformanceCompetitiveLandscapeFutureProspectsDefinitions CorporatestrategiesinDirectselling CompetitiveLandscape Amway UndisputedLeader CompetitiveLandscape Therearesimilarnumbersofmultinationalanddomesticplayersamongthetop10playersindirectsales Multinationalcompanies suchasAmway AvonandMaryKay havefocusedmoreonbuildingupsuccessfulbrandsandgrowingtheirdirectsellingbusinessesacrossthecountry whiledomesticplayers suchasInfinitusandTianjinTianshi haveputmoreeffortsintotheirproductportfolios Newentrantsfromtraditionalstore basedchannelswillraisethelevelofcompetitionindirectselling HarbinPharmaceuticalGroupandJiangsuLongliqiGroupCoLtdarewell knownmanufacturingcompaniesinvitaminsanddietarysupplementsandbeautyandpersonalcareinChina Highbrandawarenessforthetwocompaniesgivestheirdirectsellingpersonneleasieraccesstotheirtargetedconsumers Amwaycontinuedtoleaddirectsalesin2009 with46 ofvalue thanksmainlytoitseffortsinproductinnovation aswellasstrongsupportthroughmarketingactivities Itscorebusinessincludesbeautyandpersonalcare vitaminsanddietarysupplementsandhouseholdcareproducts In2009 strongdouble digitgrowthwasseenwithinitsbeautyandpersonalcareproductlines especiallyforskincare undertheArtistrybrand Thiswasaresultofaheavymarketingcampaignfromthecompany aswellasfrequentproductupgradingtargetingthemostdynamicanti ageingsubsector PriceincreasesalsocontributedtothehighvaluegrowthoftheArtistrybrand However therealstarperformerof2009wasthecompany sconsumerhealthproductbrandNutrilite Amwayheldaround10 ofthetotalconsumerhealthmarketinChinain2009 TheNutrilitebrandrepresentedoverhalfofAmway stotalsalesinChina Nutriliteistheleadingbrandinvitaminsanddietarysupplements inChinawitharound13 ofvaluesales ThebrandenjoysveryhighbrandawarenessinuppertiercitiesinChina thankstoyearsofmarketingefforts includingTVads celebrityendorsementandsponsorshipofsportsevents suchasNutriliteHealthRunning AstheleadingbrandinChina sconsumerhealthmarket Nutrilite sproductlineshavebeenstableinrecentyears Whileproteinpowderisreachingsaturationinthemarket in2009 Amway sfocuswasonthepromotionofitsmultivitaminsDoubleX accompaniedbyadsonTV instreetsandmagazines AmwaylaunchedarefillpackforNutriliteDoubleXinMarch2009 AsaresultofthegoodperformanceofDoubleX Amway stotalshareincreasedfrom21 in2008to24 in2009 AmwayKeepstheMomentum CompetitiveLandscape AstheleadingdirectsalescompanyinChina Amway China CoLtdwillcontinuetoincreaseitspresenceattheupperendofthemarket withthefocuslaidonitstwoflagshipbrandsofNutriliteandArtistry Inaddition Amwayseekstodiversifyitsproductrangesthroughinvestmentinnewproductlinesinairpurifiers waterpurifiersandenergy savingkitchenwares Thecompanyhasexperienceddynamicgrowthinrecentyears anditisexpectedthatitwillseeslightlyslowerbutstillhealthgrowthovertheforecastperiod duetoitslongemphasisonsustainableoperationsintheChinesemarket StrategicDirectionforAmwayinChina CompetitiveLandscape TiensBiotechGroupInc withitsTiensbrand lostgroundin2009 duetofiercecompetitionfromotherplayers suchasPerfect AmwayandInfinitus Asanearlystarterindirectselling Tienssufferedfrommaturityintermsofproductinnovation marketingformatanddistributionchannel whichpulleddowntheoverallperformanceofthecompanyin2009 Infinitus LeeKumLeeCo theBestPerformerin2009 CompetitiveLandscape Infinitus China CoLtdenjoyedthebiggestshareincreasein2009 ofoverhalfapercentagepoint to6 PositionedasadirectsellingplayersolelyprovidingtraditionalChinesemedicine TCM ingredients basedproducts Infinitussawstronggrowthduringthereviewperiod asconsumersperceiveTCM basedvitaminsanddietarysupplementstobehealthier Infinitus asapioneerinTCMingredients hasappliedawiderangeofTCMingredients includingwolfberryandroyaljelly inInfinitusNuri SuitSupplementMeal benefitinghumankidneyandliverhealth Meanwhile italsooffersproductswithtraditionalChinesemagnoliavine ginsengandtuberofdwarflily Infinitus brandawarenessremainsrelativelylowinChina swellnessproductmarket particularlyintierIcities suchasGuangzhou Infinitusismoreofalow profilecompanywhichundertakesalmostnoadvertising unlikeAmway forexample In2009 thecompanycontinuedtoorganisespeakingtoursbyexpertstopromotetheTCMconceptamongconsumers Infinituspositionsitselfatthemid to higherendofthemarket ThecompanypremiumiseditsproductlineswiththelaunchofInfinitusShizhenCapsulesinthesecondhalfof2009 Thesuper premiumlingzhiproductInfinitusShizhenCapsulesretailsatRMB1 249for90units andistargetedatbusy affluentconsumerswhoareseekingwellnessproductswhichcanhelpcombatageingandenhancebodyfunctionality NanfangLeeKumKeeCoLtdchangeditsnametoInfinitus China CoLtdin2009 tobepreparedforitsnextmovetodeveloptheglobalmarketin2010 Thecompanyhassettheambitiousgoalofbeingthenumberoneplayerinwellnessproductsintheworld takingadvantageofitsdistinctivenessindevelopingTCM basedproducts InfinitusStrategicAmbitions CompetitiveLandscape Avon largestdirectsellerintheworld isonlyrankedfourthindirectsalesinChina Chinais nevertheless thefourthlargestgeographicalmarketforAvongloballywithsalesreachingRMB4 3billionin2009 InChina Avonispresentinbothstore basedretailandnon storeretailingformats In2009 almosthalfofitssalesinChinaweregeneratedthroughretailstores Thecompanyoperates6 300retailoutletsinChina Intermsofproductcategories beautyandpersonalcareproductsarethefocusofAvoninChina withskincarethekeyproductandmaingrowthgenerator AlthoughAvonhashadapresenceinvitaminanddietarysupplementssince2005 itismainlyfocusedonbeauty relatedvitaminsanddietarysupplements Despiterecentattemptstolaunchnewproducts sourcesindicatethatAvon sVDSsalesarenotperformingwell AvoninChina CompetitiveLandscape MaryKayinChina CompetitiveLandscape MaryKay ssalesinChinareachedRMB3 6billionin2009 TheChinesemarketisoneofthemostimportantinthecompany sgeographicportfolio Thecompany rankedfourthintheworld isthesecondbiggestinChina Skincareisthekeyproductareaandgrowthgeneratorforthecompany UnlikethepreviouslyprofiledinternationaldirectsellinggiantsAmway AvonandMaryKay NuSkin sbusinessinChinaisrelativelysmall onlyrecordingaroundRMB526millionsalesin2009 rankingitin10thplace InChina thecompanyoperatesmostlyincolourcosmetics skincareandhaircare aswellassomevitaminsanddietarysupplements ItsvitaminsanddietarysupplementsbrandPharmanexistargetinghigh endconsumers Forinstance itschild specificVDSproducts PharmanexJungamals sellatUS 36 6for120units higherthanAmway sNutriliteproducts Duetoitsrelativelyhighprices itisunlikelytoachievewidespreadacceptanceforitsproductsamongconsumerswithlowerincomelevels Approximately80 ofitssalesrevenuesarederivedfromthetierIandtierIIcities whereconsumerstypicallyhavehigherpurchasingpower NuSkininChina CompetitiveLandscape IntroductionChineseDirectSellingintheGlobalContextFrameworkofDirectSellinginChinaCategoryPerformanceCompetitiveLandscapeFutureProspectsDefinitions Traditionalconsumerhealth beautyandpersonalcareplayersareexpectedtoextendthe