“For readers interested in the intersections of space, gender, sexuality, and ethnicity, this book has a wealth of insights to ponder. And for those interested in the complexity, vibrancy, and challenges of today’s urban and urbanizing China, this book’s the ticket.”—Greg Guldin, author of What’s a Peasant to Do? Village Becoming Town in Southern China
Ethnographies of urban China informed by current theoretical concerns.
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CHINA URBANEthnographies of Contemporary Culture
Duke University PressCopyright © 2001 Duke University Press
All right reserved.
Chapter OneLyn Jeffery Placing Practices: Transnational Network Marketing in Mainland China
What we're selling is not product but our characters!-Woman, Chinese MLM recruit
For many people in China, the last decade of the century was a time of increase: an increase in mobility, in access to a variety of material goods and cultural products, and in varied employment "opportunities." Yet it was also marked by an increase in anxiety about massive state sector layoffs and the loss of state benefits that accompanied those jobs, in anger about corruption among state bureaucrats and local officials, and in uncertainty about the ideological stability of the country's leadership. Established social topographies-cultural and institutional assumptions about who belongs where and what various categories of persons represent-have been substantively reworked since the beginning of economic reforms in the late 1970s. Much of the remapping has relied on new modes of participation in and conceptualizations of global processes, the most important being transnational capitalist markets and their cultural forms. From 1990 to its official ban in 1998, the Chinese multilevel marketing movement (MLM) offered millions of Chinese the opportunity to participate in this typeof cultural repositioning, allowing them to partially replace or subvert conventional social geographies. Old and young, male and female, urbanites and peasants alike attended three-day training sessions where they learned to talk, think, and move, ostensibly just like those above them in these transnational marketing networks. By 1997, the multilevel marketing (chuanxiao) industry, introduced to China by American, Taiwanese, and Japanese companies, had sold an estimated U.S.$7 billion of health-related products through networks with some 10 million participants. In times of financial uncertainty, MLM provided quick cash through the recruitment of friends and family organized into networks (also known in English by the pejorative term pyramids). Relying on oral presentations and training seminars, chuanxiao mobilized and capitalized upon the legendary Chinese social connections between kin, classmates, colleagues, hometown residents, ethnic groups, and, increasingly, among those of common religious faith and similar age, most notably retirees.
Since the vast majority of participants (also called distributors) had little or no background in sales and marketing, MLM training focused on the transformation of the individual into a multilevel marketer. As with MLM around the world, consumption, sales, and recruitment within one's personal networks were presented as opportunities for life enhancement rather than as the commodification of social relations. And, as with MLM elsewhere, the industry and its practitioners were often viewed with suspicion by others. State concerns centered around the significant financial, moral, and political problems posed by MLM. Not only was it nearly impossible to tax the networks of individuals spread throughout the country, but it was also difficult to control large-scale meetings of several thousand participants, meetings in which chuanxiao's implicit message about the bankruptcy of socialism was heard loud and clear by recently laid-off factory workers. In the larger national environment, where construction of a proper consumer identity had become a significant project of the state, some forms of consumerism were apparently more acceptable than others. Official worries were echoed by anti-chuanxiao narratives I regularly heard from many people outside the MLM community. These comments, often based on direct experience with chuanxiao practitioners, focused on the way marketers capitalized upon their personal relationships, "cheating family, cheating friends." By early 1998, the government had banned the industry outright, making visible the point at which the social costs of the market economy to the state became too great.
As the planned economy system is dismantled under the program of reforms, the ability of the Chinese Communist Party (CCP) to impose the state-sponsored production of culture and knowledge is increasingly being challenged. In a country where thirty years of political movements sought to create a dominant concept of the normal Chinese socialist citizen, who was encouraged to be frugal and self-sacrificing and discouraged from engaging in bourgeois or capitalist activities, widespread opinion now holds that participation in the market is not only inevitable but desirable. Whereas Maoism equated capitalism with immorality, today we find a discourse (both official and popular) of the market as a civilizing practice that implies and confers proximity to the modern. Despite widespread anti-MLM sentiment, chuanxiao made sense to millions of people within the context of this larger progressive narrative.
Not only is the notion of the market mobilized by the state as a tool to transform China into an international superpower, but forms of work such as sales and marketing are said to bring about different personal identities. These relatively newly possible identities are explicitly linked to the dizzying variety of contemporary Chinese notions of Western culture and of life outside the borders of the People's Republic. Mayfair Yang has emphasized the enormous impact of Chinese commercialism in Hong Kong, Taiwan, and elsewhere overseas on contemporary popular imaginaries of the transnational in China (1997). And yet, chuanxiao, represented by and to PRC marketers as an "originally American" practice, offers a striking example of the difficulty of identifying discursive practices as either Western or Asian or of trying to define which is more or less influential in contemporary mainland China. The MLM industry was introduced almost entirely through ethnic overseas Chinese interlocutors, but their narratives and representations articulated MLM, as a transnational capitalist practice, to an entire range of qualities, associations, and possibilities such as "the West," freedom, the fulfilled self, independence, filial piety, spontaneity, and many others. This is not to say that chuanxiao did not also resonate with nationalist and culturalist definitions of Chineseness-it did. But it was the power of MLM to redraw the boundaries of established Chinese social geographies of marginality with the space of the network that convinced so many people that the chuanxiao marketer identity was desirable despite the negative opinions of newspapers, television, friends, and family. Itself a culturally marginalized industry, the MLM network by its very nature symbolically and discursively privileges its marginal members, who are the main engine of profit for members higher up in the structure.
As Anna Tsing demonstrated so convincingly in The Realm of the Diamond Queen (1993), local, national, and transnational discourses can create overlapping zones of domination and difference, where people are excluded in multiple ways, some more than others. Within these circumstances, people find endless ways of mobilizing powerful narratives and practices for their own social, emotional, financial, or cultural ends; and sometimes, they are successful. As China becomes ever more engaged with the exclusionary capitalist networks that connect specific nodes of wealth and power, certain other capitalist practices, such as the multilevel marketing network, nevertheless also enable individuals to become part of inclusionary networks that subvert conventional notions of rurality, urbanity, and cosmopolitanism. Chinese MLM is thus best understood as a proactive placing practice, that is, a practice that situates individuals within an imagined geography (in this case, a commodified geography, a market) and revises their marginality or centrality at multiple levels of meaning.
Below I briefly introduce the establishment of the industry in the PRC and then explore the central chuanxiao idea of "duplication" (fuzhi), one of the mechanisms through which the sociospatial hierarchy of transnational networks of Chinese marketers was created. It didn't matter where distributors actually resided as long as they "duplicated" the emotional, physical, intellectual, and social status of those in the network "above them." This duplication replaced new recruits from the edges of the network into its inner webs. It also assigned a market value to certain narrowly defined techniques (dress, comportment, speech, and consumption) that were felt to bring cosmopolitan transnationalism in contact with the body of the individual. At the same time, the vast range of behaviors and beliefs that lay outside of the confines of MLM were devalued and made illegitimate or even immoral, in a neat reversal of generally negative public opinions of chuanxiao.
Leveling the Competition "Chinese people are born to chuan," said one successful distributor in an interview. The translation "chuanxiao," originally Taiwanese, from the Japanese, from the English, was an apt one: the practice of marketing or selling, xiao, was being chuan, a versatile word with meanings including "to pass on, hand down, impart, teach, spread, transmit, convey, infect" (Shanghai Jiaotong University 1993: 358). With more than a passing resemblance to another chuan activity-chuanjiao, or "doing missionary work"-chuanxiao was spread by word of mouth, literature, videos, and especially group meetings often led by charismatic, articulate marketers. Typically, MLM producers or companies sell directly to consumers, who then become a marketing and advertising force that moves product for the company by building "levels" of consuming sales-people below them into hierarchical networks. As in MLM around the world, new recruits take up their positions "down" the "line" from their "upline" (shangxian), the person who introduced them. The vertical line of distributors leads back up to the company of course, and in the case of many MLM firms, beyond Chinese national borders.
This spatial hierarchy is manifested in both practice and profit. The principle of multilevel marketing is elegant in its simplicity: on top of the wholesale price for a product add a hefty markup (up to 60 percent of the final price) and return that markup directly to the sales force. Require salespeople to buy a certain amount of product at the retail price in order to "enter the network" (ruwang, ruhui) and obtain the selling rights. Those who have the right to sell are then able to take advantage of the 60 percent commission that is redistributed by the company, ideally the producer. In MLM, an individual makes a commission on not only his or her own sales but on those of several levels of distributors in the network below. From the company's perspective, consumers are also employees: they are marketers, advertisers, personnel managers, and customer relations officers rolled into one. Further, by structuring the sales force in vertically integrated webs one obtains an exponential effect. As MLM advocates love to demonstrate on blackboards across the world, if a distributor were to find "only one person a month" to be in his or her network, and each of them was in turn able to find only one person a month, he or she would have a network of 2,048 people after just one year. Under one popular Taiwanese-owned company, such a network would have pulled in 200,000 renminbi (RMB) a month (U.S.$24,000), at least for a certain period of time. The initial investment required to become a distributor ranged from two weeks' to half a year's salary or even more, but this did not seem to stop some people from borrowing money or selling possessions to scrape the sum together. In fact, it was often the poorest who were most attracted to companies with extremely high entrance fees, since these would also yield higher profits in a shorter period of time.
The first chuanxiao companies to arrive in China were based in Taiwan, Hong Kong, Japan, and the United States. Major international firms with global networks began initiating recruits alongside small, fly-by-night outfits that provided shoddy products and left many distributors out of luck and money. Chuanxiao's person to person distribution system allowed companies to conduct sales outside any known Chinese commercial distribution system. According to Chinese economists who have studied the industry, the government seems to have been caught unawares, as these early companies paid little tax and imported goods without being subject to normal commercial regulations. In fact, the state had never encountered this type of marketing on such a large scale. Nevertheless, MLM expanded to every corner of China and huge quantities of products were sold (and huge profits made) by individuals, companies, and local state agencies, including commercial, tax, and public security organs. As in many other national MLM markets, the most popular products in the PRC were health related (exercise machines based on Chinese or Japanese medical principles, Chinese medicinal beverages, calcium, lecithin, fish oil, aloe products, and so on) or home related (shampoo and soap for the body and home, computer and TV screens, and so on).
By definition, MLM avoids formal paid advertising and draws its recruits from personal relationships. In China, company representatives (primarily distributors with their own profit incentives rather than company managers) created a market for the concept by convincing people one on one and then in larger meetings. The key was that they had to recruit the right people-people who were ready to hear their mixed message of personal growth and fortune, those who were not wealthy but could imagine wealth within their grasp, who were articulate or at least had a certain amount of social status. The first MLM companies did manage to attract highly placed elites, especially those in the culture industries. After it became apparent to these first participants that they would not be making money as quickly or easily as company propaganda promised, MLM spread to less well positioned people who had farther to climb in terms of upward social and economic status. Foreign marketers started from places where they had access to convenient transportation and communications. Overseas Chinese often had family, friends, and professional contacts in urban centers. A deeply rooted domestic and transnational characterization of the Chinese countryside as backward also engendered the assumption (still common among foreign marketers today) that a "new" idea such as MLM would never be accepted in the village. For these reasons, early recruits were not drawn from villages but from major urban commercial centers across the country-Guangzhou, Shanghai, Beijing, Wuhan, Shenzhen, Dalian, Qingdao, Xiamen, Xuzhou, Chengdu, and others. The first "new soldiers," as they are occasionally referred to in industry parlance, were urban professionals (academics, journalists, and business people), younger people who literally "looked the part" and were picked o the street, and mainland relatives of ethnic Chinese distributors residing in other countries.
Once chuanxiao was introduced to urban Chinese, it spread through their local personal and professional networks and, if they were successful, moved farther afield to their distant relatives, old classmates, fellow war veterans, and so on. Urban migrants (waidi ren), who generally have more difficulty establishing local connections, were in a position of strength, for they could take their chuanxiao business away from the major urban centers, back to their villages and hometowns, and introduce it as a new, decidedly urban form. As with the development of MLM in many countries, chuanxiao's message was ultimately most attractive to those who had some difficulty accessing channels to money and power within the extant system-poor, aspiring, or undereducated residents; laid-o urban workers with few marketable skills; educated professionals in state-run "hospitals" and schools; and workers in transportation and manufacturing sectors, whose salaries lagged behind those in the private sector.
Excerpted from CHINA URBAN Copyright © 2001 by Duke University Press. Excerpted by permission.
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