USANA Health Sciences, Inc. is successful for one reason, Multilevel Marketing (MLM). USANA distributors can recruit more distributors, and because any distributor who wants to participate must personally purchase over $100 worth of product every 28 days, there is no need to retail product. Commission is paid to upline distributors from those mandatory product purchases made by their downline. So in MLM, selling the dream of making money and recruiting new distributors is what makes 1% of distributors a lot of money and make USANA very profitable. However, mainland China does not allow MLM compensation plans!
Mainland China only allows single level marketing compensation plans. So the only means for a distributor to make any money would be to retail product to real customers, which is really what direct selling is suppose to be about. For USANA to bring their product into China, USANA must at least drop the price of their product line in half (or more). This would allow its distributors in mainland China to retail the product and make a “Profit Margin”. This profit margin in currently unheard of with USANA's products around the rest of the world because the distributors already pay a premium retail price for the product and cannot resell it for more than they paid. Also, USANA's preferred customers pay the same price as the distributors. USANA would also have to reward those Chinese Nationals that actually retail product unlike those around the rest of the world which are rewarded for recruiting more distributors instead of retailing product. In case this isn't clear, distributors in mainland China would not have a downline! These distributors would also only be recruited by USANA's corporate office (or BabyCare for now) and not by distributors inside or outside the country.
There are good reasons for USANA to make this move however. They will try to use it to encourage the rest of their markets to recruit like crazy. USANA can put in their promotional material that they are only 1 of 25 companies in the world that have a direct selling license in mainland China, which is now the second largest economy in the world. If USANA distributors thinks USANA will be able to grow a large distributor base in China and maintain those distributors, then those distributors are in for a surprise. Again, what incentive is there for Chinese Nationals to join a distributorship with BabyCare/USANA? Unlike MLM where distributors think they work as a team, single level marketing means that each distributor is a competitor to one another. So the more distributors in a single level marketing plan, the less each distributor has to potentially make. Because of this, the number of Chinese distributors not rise as much as some believe. If the numbers grow too big, Chinese distributors will not last very long and will drop out even quicker than MLM distributors do.
Goodluck to USANA though. If USANA brings their product line into mainland China, they'll be forced to drastically lower the price of their products. Then the Chinese National distributors will pay about $50 USD or less for a USANA HealthPak100 and resell it for about $70 USD and make a $20 profit from each box sold, unless USANA refuses to lower the price. Oh, and if you think the product sent to Chinese Nationals would only be resold in China, think again. USANA has been unable to police Ebay and other auction sites for USANA distributors who have been reselling massive amounts of product at half the price that it costs distributors to purchase; all for the sales volume points (MLM point game)! What would stop Chinese Nationals from using ebay to resell all their product world wide and do it for a real profit while still reselling it for a cheaper price than any other USANA distributor elsewhere in the world could even buy it for.
Bottom line, MLMs have not been successful in mainland China and that is because MLMs were never about retailing product. MLM's like USANA are in business to sell the opportunity to make money (the dream). China is smart because they know a pyramid scheme when they see one; MLM. Companies in mainland China with a direct selling license can only succeed if the product is very affordable and competitive against those on store shelves. With a LIMITED distributor base, the product line can make the company and its distributors a lot of money. But if the product is too expensive, customers will not buy, and distributors will leave.
