Amway chairman Steve Van Andel at a conference of 13,000 Amway business owners in Guangzhou, China in December. Photo / Twitter @Amway
Amway chairman Steve Van Andel at a conference of 13,000 Amway business owners in Guangzhou, China in December. Photo / Twitter @Amway
Bringing the American way of selling skin-care products and vitamins to China helped make Amway the world's largest direct seller. It also made the children of one its co-founders billionaires.
Amway chairman Steve Van Andel and his siblings David Van Andel, Barb Van Andel-Gaby and Nan Van Andel own half of Alticor, Amway's Michigan-based parent company. The stake, which they inherited in equal shares after their father, Jay Van Andel, died in 2004, is valued at $4 billion, according to the Bloomberg Billionaires Index. They've never appeared on an international wealth ranking.
Their ownership interests were confirmed by two people with knowledge of the holdings who asked not to be identified because the information isn't publicly disclosed. Richard DeVos, 88, owns the other half of Alticor. He has a $4.5 billion fortune, according to the Bloomberg ranking.
The family declined to comment on the net worth calculation.
"The greatest thing my father did for any of us was give a set of values that are part of the business today," Steve Van Andel said in a November interview in New York.
Founded in 1959 to sell a liquid household cleaner, Amway pioneered the use of self-employed individual resellers instead of retail stores to peddle its goods. The company employs more than 20,000 people in about 100 countries and sells about 450 different products through a network of more than 3 million non-employee salespeople.
"The idea of a person-to-person, consultive type of sale works in nutrition and skin care. That is one reason why these companies continue to thrive," Timothy Ramey, a Portland, Oregon-based retail analyst with Pivotal Research Group, said in a phone interview.
Steve Van Andel, 59, has served as chairman since 1995 while two of his siblings sit on Alticor's board. David Van Andel, 55, leads an institute in Grand Rapids, Michigan, started by his parents, which focuses on biomedical research and science education.
Barb Van Andel-Gaby, 52, has six children, lives in Atlanta, Georgia, and has been "a dedicated homeschooler since 1998," according to Alticor's website. She's been a board member of the Heritage Foundation, a political research firm, since 1996.
Nan Van Andel is the only sibling no longer involved in the family business. She's president of the Silverwing Foundation, also founded by her parents, which donates to religious causes, according to its 2013 tax filing with the Internal Revenue Service.
The Van Andels profited from an early push into China, where it was one of the first direct sellers allowed to operate, establishing Amway China in 1995. At $18 billion, China is the second-largest direct-selling market in the world. It's also the fastest growing. The US market grew less than 1 per cent last year, compared to 19 per cent for China, according to research firm Euromonitor International.
They mentally realise that we're an American business, but they think of us in more ways as a Chinese business. Our employees and business owners are Chinese. The face that we have and how we look to people in China is Chinese.
CEO Van Andel credits the company's efforts to adhere to Chinese business models.
"They mentally realise that we're an American business, but they think of us in more ways as a Chinese business," he said. "Our employees and business owners are Chinese. The face that we have and how we look to people in China is Chinese."
The direct-sales model produced sales of $10.8 billion in 2014, 8 per cent less than the prior year, according to Amway. A strong US dollar and lower revenue in China, its largest market, contributed to the decline, the company said on February 4.
Amway's publicly traded peer companies also had difficult years, with five of six experiencing share price declines, according to data compiled by Bloomberg. Two of the largest, Herbalife and Nu Skin Enterprises, lost more than 50 per cent of their value last year amid pyramid scheme allegations and corruption probes.
The company's direct-selling competitors have had difficulties operating in China. Nu Skin's sales in China fell by 56 per cent last year to about $213 million. The drop was due to a government investigation that temporarily froze business and resulted in $540,000 in fines for unsubstantiated product claims and selling items illegally, analyst Ramey said.
In the US, a Federal Trade Commission is investigating whether Herbalife is run as a pyramid scheme. While a number of legal cases in the 1970s and 1980s decided forms of direct selling were legitimate, uncertainty over the investigation and a short-seller push on Herbalife by billionaire hedge fund investor Bill Ackman has led many investors to sit out owning direct selling stocks, Ramey said. He owns shares of Herbalife and Nu Skin.
"It is fair to say if Herbalife is a pyramid scheme, then so is Amway, so is Nu Skin, so is Usana Health Sciences," Ramey said. "The answer is none of them are."
