Last summer the Amway Company organized a trip for Ukrainian journalists to its hometown, Grand Rapids (Michigan, USA). It is their native town not only because the dynasty of the company’s founders comes from there, but also because the town Eida, which is in Grand Rapids suburbs, is where the Amway manufacturing plant is located. The company marked its 50th anniversary in 2009. One must admit that this is a respectable age for any business, especially one that is based on direct sales, which tend to be seen quite sceptically by consumers. But what amazed the Ukrainian journalists the most was the owner’s attitude to business, and his understanding of his role in the social sphere.
Let us start with a bit of history. In 1959, two friends, Rich DeVos Sr. and Jay Van Andel, founded Amway, a direct sales company. They started from just one product, a multifunctional household cleaner, which is still successfully sold by the brand L.O.C(tm). Today the company offers over 450 products. In parallel to the company’s development, its owners developed the infrastructure needed for efficient work around the company. Owing to the families of Amway’s founders, the 200,000 strong Grand Rapids, has seen the construction of research institutes and colleges, cultural centers, museums and sports complexes to date. I think that if big Ukrainian business did at least one-tenth of what Amway is doing around its offices, plants, buildings, Ukraine would have made a civilizational leap forward of several decades.
At the moment Amway is headed by its founders’ sons, Doug DeVos and Steve Van Andel. In their work they are guided by the values proclaimed many years ago by their fathers: freedom, family, hope, and reward. The current president of Amway Doug DeVos, who has recently been on a visit to Ukraine, speaks about the philosophy of successful and socially responsible business, and many other things.
Recent studies by experts from around the world indicate that businesses typically exist for 12.5 years. Amway marked its 50th anniversary last year. This is quite a respectable age for any company anywhere. What is the formula for such a success?
“The first thing you should clearly understand is what makes up the foundations of your business. Amway is based on the values of its founders, which distinguish our company from others. Secondly, business should regularly grow and change, adapting to the market’s needs. For this purpose our company has been constantly producing new products, implementing innovative technologies and solutions; it has been following the modern tendencies of the market. Owing to this, we have reached our 50th anniversary and we intend to go on for the next 50 years.”
You are speaking about the changes in the country, the changes of market conditions. Amway has been operating in Ukraine since 2003. The Ukrainian market has undergone a lot of changes during this period. Has Amway been keeping track of these changes? In your opinion, is the Ukrainian market moving in the right direction?
“We are keeping track of market changes: our Ukrainian team always informs us about what is going on. Similarly, all the trends are analyzed on a global level. The company’s task is to find solutions which would enable us to meet the needs of the market and at the same time be in harmony with the traditions and culture of doing business in a given country. I think that while business is generally developing it is a movement in the proper direction. Speaking about the Ukrainian business: it continues to develop according to all the laws of the market economy. In my opinion, a business’ development shows if the strategy was chosen correctly.”
Could you compare the Ukrainian market with the Russian one, which is close to it, at least in terms of geography?
“The Ukrainian market is very dynamic and we highly assess its potential. The company can meet the needs of the market, keep track of trends in its development, and grow with them. Comparing the markets of Ukraine and Russia, Russia has a much bigger population, therefore the Russian market is more capacious. However, companies are not just concerned with trade volume but also with market share.”
What is the social responsibility of business for you?
“Amway’s social responsibility is a logical continuation of the system of values of our company. We are a part of society and we want to be useful for it. If our goal is to be a successful company, to achieve that we should be part of a successful society. This is a sort of closed circle. We should run our business, be responsible and share the fruits of our labor with society.”
How can you explain to Ukrainian businesses, which have just recently acquired the notion of “social responsibility,” that in order to be successful, one has to be socially responsible?
“We are not here to tell others what to do. But we can serve as an example for them. Consumers want to know more about the company, its products and its services. They want to see what the company is doing for society. This is becoming increasingly evident both for actors on the Ukrainian market, and the global one. Amway’s popularity in the world is largely due to its system of values, which has existed since the company was established, including the principle of sharing with society. Nowadays the market itself expects a manifestation of social responsibility on part of business with increasing frequency.”
Few, if any, successful Ukrainian businessmen demonstrate their intentions of developing the social infrastructure around them and their companies. Is Amway’s social policy a norm for American business?
“I guess so. Grand Rapids has many companies which, like Amway, have contributed by building the city’s infrastructure. This is a part of business culture in our country, as well as in many other countries. Perhaps, such manifestations are not always seen, or they are not always implemented on a large scale. But people in the whole world are interested in mutual assistance. The developing countries’ business or small companies need time so as to make social responsibility part of their activities. But including this into the company’s development plan from the very beginning is a peculiarity typical of American business. A company cannot work exclusively for profit. Although efficient work and profitability in themselves are regarded as elements of a business’ responsibility, there should also be an ethical component. This is needed for the employees, consumers and society to acquire additional possibilities for their own realization. I believe that free entrepreneurship offers people a wonderful opportunity for development. We achieve better results when understanding that thanks to this we can render greater assistance to society. This is also a part of Amway’s business.”
There is an opinion (and your competitors use this as an argument) that direct sales companies are successful only on developing markets. How do you reply to this kind of opinion?
“The greatest markets for direct sales are the US and Japan. In many other countries of the world with developed economies the branch of direct sales is also successful and growing. I think that facts and figures proving these examples are the most weighty argument. Direct sales is a very powerful industry, which functions very well both in strong economies and in developing ones. We consider that both the Amway business, and the industry in general, provide a possibility of extra income or building one’s own business, and have a positive impact on the level of welfare in countries with any level of economic development.”
You mentioned that you are making plans for the next 50 years. What kind of plans are those? How do you view Amway in 50 years?
“We will stick to the principles of the founders and existing values of the company. Amway will continue to offer opportunities for people to set up their own business. We will also bring many new products and brands onto the market, provide products and services of high quality, and render greater assistance for Amway’s independent entrepreneurs. As new technologies appear, the company will be implementing them actively, and perhaps they will have a strong effect on our business. I think Amway will grow, become stronger, more innovative, and will react to all the market changes in a flexible way. Over the last years we have doubled and even tripled the amount of investments in market research. We have become more focused on the demands of markets in different regions and will for sure go on with the same policy in the future.”
Please tell us a few words about the current situation in the US and the American economy. Do you feel that the American economy is riding out the crisis? What are the causes for this? What measures have been the most useful?
“Various branches of economy are not riding out the crisis simultaneously. I expect the situation to finally become stable in 12-18 months. I am absolutely sure that the American economy will be restores. We will go through all economic trials and solutions will be found. Hopefully, our nation will learn its lessons and politicians will make correct decisions.”
Regretfully, the European press frequently uses the exression “Ukraine fatigue.” Do Americans also feel this “fatigue,” caused by regular negative events taking place in Ukrainian politics and in news linked with Ukraine?
“No, the US perceives Ukraine in a very positive way. The Americans like that Ukraine has become independent and that it is developing. We are very glad to work here and we feel that we are welcome. We understand that we are guests in this country, therefore we are trying to behave in a appropriate manner.”