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Shows & Panels
Amid Vietnam gloom, US company promises riches
Thursday - 11/15/2012, 6:09am EST
By CHRIS BRUMMITT
HO CHI MINH CITY, Vietnam (AP) - The Australian salesman flashed up a slide of a black Rolls Royce and pitched enticingly to a roomful of Vietnamese students facing an uncertain economic future: join me in selling anti-aging products and the car _ and much more _ could be yours in just a few years.
It's a simple formula that has worked well for the company, Nu Skin, which has stormed through Asia over the last two decades, racking up huge profits despite regulatory scrutiny over its marketing practices and the efficacy of the products that it sells.
Vietnam is the latest frontier for the Utah-based company, which set up here in August, launching at a time of stuttering economic growth, rising business bankruptcies and joblessness.
That kind of environment would hold back many consumer companies, but for multilevel marketers it is not necessarily a problem. Selling a cheap business opportunity, not to mention one that is billed as lucrative, is easier in troubled times. With unemployment lines lengthening, there are more potential recruits in a country where the average income is about $3,000 a year.
"When the economy is bad, people turn to us," said the Australian, Brian Tran, one of more than 100 foreigners who have come to Vietnam seeking a position atop the Nu Skin pyramid as it grows in virgin territory. "There are millions of unemployed. It is the right time for MLM. The market is just exploding."
Companies like Nu Skin market their skin care, weight loss and nutritional products via a network of independent distributors who get paid a commission on the volume they sell. The marketers are encouraged to sign up recruits and are then paid a commission based on sales they make. In such a way, a few thousand distributors at the top of sales networks spanning the world can make fantastic salaries. Tran, a "blue diamond" sales executive, claims to be on $45,000 a month, much of it from the Vietnam market. Those at the bottom make much less.
The company says in the U.S. the average commission for an entry-level distributor is around $500 a month, and that the attrition rate is 63 percent. Nu Skin, which is predicting revenue of more than $2 billion this year, declined to give a breakdown of its commission figures in Asia.
MLM companies have mushroomed in Vietnam over the last 10 years. The industry is worth $200 million a year and employs over 1 million distributors, according to the government-sanctioned MLM association.
The businesses, local and foreign, have a bad reputation after hundreds lost money in well-publicized fraudulent schemes over the last year. The government has pledged to tightly regulate the sector.
The MLM business has a patchy reputation in other parts of Asia also.
Nawarat Rojpientham started selling Nu Skin products in her native Thailand in 2010 after being introduced to them by a friend. The 40-year old stopped after less than a year, with more than $200 worth of stock in her home unsold. She complained of high pressure from team leaders, unreasonable sales targets and an inability to make money regardless of how hard she worked.
"They would implant this idea inside your head that you have to find more clients and sell more products, and that's what I did every day for almost a year," the mother of two and former nurse said. "The only one who really benefited from the sales was the company, not me. I had to buy a lot of products each month to meet the quota. But it wasn't worth it, in the end."
The company's website warns that the business is not a "get rich quick program" and that "generating meaningful compensation as a distributor requires considerable time, effort, and commitment. Critics claim the profits earned by multilevel marketing companies are dependent on a constant churn of people like Rojpientham, who face stiff odds of ever making a decent living.
"Almost everyone is being sold to a ticket on a flight that has already left," said Jon Taylor, a former distributor and well-known critic of Nu Skin and other MLM companies. "It is only an opportunity for the first ones in and the ones at the top of the pyramid. If you come in late, there is no chance to get anywhere."
Around 100 students crammed into Tran's sales pitch in a room at the company's headquarters in Ho Chi Minh city. The economics students, from a prestigious university in the city, had been invited by their teacher who was friends with a relative of Tran.