Arrest is anti-fraud, not anti-direct selling: Doug DeVos, Amway Chairman

Doug DeVos, global president of the $11.9 billion direct seller Amway Corp., is in India as part of the company’s bid to clear the air regarding its business, which came under a cloud after three India executives were detained for a day on alleged charges of cheating former distributors. He told Ratna Bhushan that the direct selling industry hopes to make its messages clearer and simpler to its stakeholders in India besides convincing the authorities that it’s a bonafide business and not to be confused with scamsters running pyramid schemes.

The maker of Glister toothpaste and Nutrilite powder, which began commercial operations in India in 1998, now has a turnover of Rs 2,169 crore and sells products in categories such as personal care, home care, nutrition and wellness and cosmetics. Edited excerpts:

* How do you see the investment climate in India?

These are clearly challenging times. There’s lack of clarity, so a lot of companies who are not in the market are really cautious. People (companies) who are not here realize there’s a lot of potential but they don’t know when they are going to be here. For those of us who had already made the decision to be here many years ago, India remains a dynamic growing market. We are investing in manufacturing facilities and new product development, but there is concern among multinational companies who are not here yet. While every company has to make its own decisions, as market leaders, our responsibility is to create the right environment… What we try to do is continue to learn from each other and help in operating in the best way in the market place

* What are your takeaways from the incident in Kerala (where the arrests took place)?

The big takeaway has been that the real issue is anti-fraud. It is not anti-direct selling. Direct selling is a solution. We thought the action that was taken was wrong. Regulation was misapplied to our industry and that should not happen. We have been in operation for 100 years… We are as interested in identifying fraud and protecting consumers from fraud as the government is. We will work through the challenges… We are going to keep finding solutions for better operations and greater understanding of consumers. The focus is to work with everybody — the business community, government. The solution is also articulating our consumer protection policies, refund policies, sales opportunities.

* Has such an incident happened to Amway in any other country?

Unfortunately, yes, in different ways. We have dealt with being the target. In countries like China and (South) Korea, for example, there was a lot of confusion about direct selling as well. And in these countries, Amway is still operating, and operating successfully. We are a very dynamic business globally, and we have very strong businesses in those countries

* Did the arrests impact your business plan?

There’s obviously been some business impact, specially in the south. But we still have offices in Cochin and Trivandrum. We will stay there… and continue to support people who are working there. We continue to deliver products there. Hopefully, the regulatory issues will be resolved. Having said that, we made a commitment when we arrived… a long-term commitment. We’ve never left a market. We are part of the India growth story, want to protect consumers, challenge ourselves to be better. This is a dynamic market place. India would be a little less than 5% of global sales and that we believe is very important. We recognize that this is a growing market and we are ramping up manufacturing here… We announced a manufacturing investment of Rs 400 crore last year. Our two core businesses here are health and beauty, and our top two brands in India are Nutrilite protein supplement and Glister toothpaste

* Post the arrests, what measures are you taking to ensure this isn’t repeated?

There’s nothing more we can do… We have done all we could. But if anyone has a question, we are going to show up and articulate the answers through our messages. Sometimes the way we communicate can be improved. We are doing that.

* Are Amway’s sales slowing down across markets?

An economic slowdown does distract consumers. In the US, the past couple of quarters, business has been flat. In Japan, it has grown, while in Europe, we have seen mixed results

* Who do you see as closest competition – traditional consumer goods firms such as P&G, HUL and Revlon, or direct-selling ones like Oriflame and Modicare?

We have to pay attention to what is happening in the market place. We use the direct-selling channel but we are an FMCG company. We are consistently watching both traditional FMCG and direct-selling companies. But unlike traditional consumer goods firms, we do promotional offers selectively.

Source:Economic Times

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