The Hindu Business Line : Amway may take some India-only products abroad

The concept of direct selling is picking up in India with sales estimated to be around Rs 2,700 crore and growing annually at 15-20 per cent, according to Mr William S. Pinckney, Managing Director and CEO, Amway India Enterprises.While he did not foresee immediate plans to make India a global manufacturing hub for Amway, he expected some of the products marketed by Amway exclusively in India to find their way abroad.

Outsourcing hub

Asked whether India was likely to become an outsourcing hub for some Amway products, at least for markets in the neighbouring countries, he said Amway currently had three manufacturing bases — the biggest in the US, the next in China and the "third biggest one and still growing" in India. He said there was `no requirement' at present to turn India into a (manufacturing) hub. Amway has developed some new products for the Indian market and if these succeed, other markets might want them. He saw potential for some products that were exclusively developed for India, such as those sold in sachets.

Asked whether Amway would establish a manufacturing facility rather than resort to outsourcing, Mr Pinckney said his company had invested around Rs 150 crore in India, of which Rs 26 crore was in the form of FDI. When the company entered India in the mid-1990s, the Government did not allow it to establish any manufacturing facility and it was asked to work with the SSI sector. It tied up with five contract manufacturers for most of its products marketed in India.

Own plants

The rules were subsequently relaxed to allow Amway to establish manufacturing facilities, but by then the manufacturing partners were found best suited for the purpose. To meet the growing demand, however, Amway plans its own plants in the future while retaining partnerships with existing suppliers.

The annual turnover of the direct selling segment in India was estimated to be around Rs 2,700 crore, he said, which was only a small percentage of the FMCG market. The direct selling market was growing 15-20 per cent a year in the last few years. Amway's sales turnover during September 2004-August 2005 was Rs 633 crore and Mr Pinckney was hopeful of doubling this in the next few years. The global size of the direct selling segment was $ 80 billion and even in a relatively small country like Mexico, it was worth nearly Rs 12,000 crore.

Unlimited potential

He said the potential in India was unlimited as people now have more money to spend than when Amway started here in 1998. There is a strong entrepreneurial spirit in India and more people are willing to be a part of the Amway network, he said adding that the company would offer more products here.

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