GRAND RAPIDS, MI — Direct sales giant Amway is ramping up production in West Michigan of several immune system-boosting supplements for the Chinese market after the rapidly spreading coronavirus disrupted the supply chain in the world’s most populous country.
“Our challenge from a business point of view in China — it’s not so much demand, it’s supply,” Amway CEO Milind Pant said Monday, speaking to the Economic Club of Grand Rapids at the JW Marriott.
“Our factories here are going on overdrive to produce for China.”
After factories throughout China were shuttered last month to slow the spread of the virus, which has killed more than 2,600 people in the country and infected tens of thousands more, the Chinese government granted Amway special permission to reopen its manufacturing facility in the port city of Guangzhou, Pant said.
He said the Chinese government made that decision because it believed that products aimed at strengthening the immune system, including Amway’s line of Nutrilite vitamins and supplements, were part of the solution to combating the spread of coronavirus.
But because of other factory closures in the country, Amway had been unable to secure the necessary packaging and ingredients to meet demand for select Nutrilite products, Pant said. That includes the Bio C Plus, Garlic and Peppermint, and Immunity Echinacea supplements.
“These three have just spiked up in demand,” Pant said. “We are almost scrambling to different manufacturing locations and global supplies to meet that demand.”
As a result, the company boosted production of the supplements at its Ada headquarters and its factory in Buena Park, California.
The coronavirus originated in China but has spread to other countries, including South Korea, Italy and Iran. Nearly 80,000 people have been infected, and more than 2,600 people have been killed, the vast majority in China. Symptoms include fever, cough, shortness of breath and breathing difficulties, according to the World Health Organization.
In severe cases, it can cause kidney failure, pneumonia, severe acute respiratory syndrome and death.
China is Amway’s largest market, accounting for nearly one-third of the company’s global revenue, which totaled $8.4 billion in 2019. Worldwide, Amway has roughly one million distributors, also known as Amway Business Owners. About 250,000 of them are in China.
In addition to supply chain challenges, the virus has affected how Amway’s distributors sell the company’s products.
Traditionally, Amway distributors would do business through face-to-face and group meetings, during which the distributors explain the company’s products and make sales. But technology has changed that. Now, the company’s distributors can host such meetings online through social networking platforms — a practice the coronavirus outbreak has accelerated.
“In China, they’re now doing it all online,” Pant said. “Virtual meetings, virtual trainings. In some sense, in crisis there is opportunity, and we are looking at those opportunities.”
Disruptions in the Chinese market can have a significant impact on Amway’s bottom line.
Last year, for example, the company’s sales fell 5 percent, due in large part to heightened scrutiny by the Chinese government of many businesses in the direct selling and health food industries, Amway said. The heightened scrutiny was a result of exaggerated product claims made by Quanjian, a Chinese company, according to a report by China Daily.
Pant said it’s too early to say how the coronavirus outbreak will affect Amway’s finances.
“It’s unpredictable and too early,” he said. “As the year goes along, we will know better the impact of this. But that is really not our priority just now. Our priority is to have the Amway family safe, help the communities and those needs the society has.”
Amway is a privately owned family business that sells Nutrilite health supplements, Artistry skin care and cosmetics, home care products like soaps, and durable products such as individual water and air treatment systems through close to one million distributors. It employs about 3,000 people in West Michigan.
-The Associated Press contributed to this report