Last weekend, 90 buses, filled with 4,500 Chinese tourists, roamed the Netherlands courtesy of Perfect (China) Co. Ltd., a direct sales firm specializing in household and beauty products. It was an ostentatious trip, but nothing compared to the early May tour of France that Tiens, another Chinese direct sales firm specializing in health and beauty sponsored for 6,400 of its representatives. And that was smaller still than the 110 flights chartered in mid-May to take 12,700 Chinese tourists to Thailand, all of whom — that's right — work for another Chinese direct sales company, Infinitus, specializing in health and beauty products.
Welcome to China's booming direct sales sector, where revenues have gone from zero to $18 billion in the past decade. It might seem surprising that such an old-fashioned business model — which revolves around people hawking wares to people they already know — is succeeding despite facing competition from the world's largest e-commerce sector. But there's a reason direct sales have found fertile ground in China: Trust is still a relatively scarce commodity in the country's business world.
The modern direct sales industry began in the West in the late 19th century, when companies began handing out commissions to people who agreed to work their personal social networks for sales. Nearly a century passed before Avon (the direct sales company famous for its Avon ladies) tried expanding to China in 1990. Amway followed in 1995.