In May 2013, shock and a pall of gloom descended over the Indian operations of Amway, the direct selling firm whose portfolio includes shampoo and protein powder. Its expat managing director William Pinckney along with two other senior leaders were arrested and taken to jail on allegations of cheating distributors and unethical circulation of money.
This was followed by yet another round of arrests of Pinckney and a couple of others lasting over two weeks, the direct selling industry facing litigation, apprehensive employees and distributors looking for other employment options and the growth momentum winding down.
A few years later, a cricket match is on within the same office premises, with the man in the corner room, Anshu Budhraja, donning the wicketkeeper gloves and urging employees to give the tournament — Amway Premier League — their best. So what's changed?
After as many as 16 years, there's an Indian at the helm of affairs of the seller of Satinique shampoo, Glister toothpaste and Nutrilite protein powder. Budhraja, a company veteran of 15 odd years is leading employee morale retention, engaging with the government, getting to the root of Amway's problems and pushing the business in the direction of growth.
Budhraja doesn't mince words about the criticality of having an Indian to lead India. I have personally been to all meetings we have had with the ministry of consumer affairs. I feel their level of understanding with the Indian piece is much better than it was earlier.
An Amway Next strategy for business and another that hinges on 'optimal health' for employees including yoga sessions in office premises, flexi timings with four options to log in and diet plans, have been brought in. Tripling topline, starting local company-owned production, doubling employee strength from 500 to a thousand over the next 18 months, getting into categories such as child nutrition and energy drinks and sprucing up stores in association with Microsoft to look digital is the gameplan, part of the blueprint the India MD has charted.
The Indian Direct Selling Association (IDSA) secretary general Chavi Hemanth says: When you are a CEO in India, you are almost doing business in an entire continent, given the diversities and socio-economic structure here.
But HR folks say the tide can turn either way. Rahul Nene, MD at search firm Witthaus Management Consulting, says: It's while conducting business with lawmakers, suppliers, customers and employees: that's where Indian CEOs score over foreign counterparts. But he also points out: The same companies that promote Indian heads may also replace them in times of turmoil, compliance or regulatory issues or whenever they believe consistent monitoring is required. A case in point: sportswear maker Adidas and burger giant McDonald's — both promptly brought in expats when the going got tough.
Still, despite the adrenalin Budhraja is pumping, an immediate breakthrough on the horizon on the regulatory front isn't visible and officials in concerned ministries such as consumer affairs say clear guidelines on complex issues such as pyramid selling and chit fund operations are still some time away. A couple of months back, a resurgent food regulator Food Safety & Standards Authority of India (FSSAI) too directed Amway to recall some products in its nutrition portfolio, for allegedly being sold without approvals.
A top Delhi-based Amway distributor, speaking on condition of anonymity, says: What happened has been disturbing to say the least. If an MD can be arrested twice, what about our future growth prospects? Being associated with the company is risky, even though we know they are not doing anything wrong and have quality products. But the government is bigger and we are moving out of the Amway system, she says.
Amway has consistently maintained that the key issue is amending the Prize Chits and Money Circulation Schemes (Banning) Act which is confused with legitimate direct selling. The Prize Chits and Money Circulation Act, which falls under the Ministry of Finance, gives power to the police to seize, seal and arrest on the basis of a complaint.
At Rs. 1,900 crore, Amway India contributes a minuscule amount to the $10.8 billion Amway Corp, though it is a Top 10 market in growth terms. But it leads the Rs. 7,200 crore direct selling industry, reaching consumers through distributors instead of through retailers. Amway is seen as somewhat of a bellwether of the industry — which peers like Oriflame, Tupperware and Herbalife are looking to — for direction in a complex and tough regulatory environment.
Get more information, facts and figures about Amway, click here for the Amway overview.