Speech of Jeffrey Babener
August 4, 2001
St. Petersburg, Russia

Good Afternoon

Dobra Dien

Mr. Li, Honored Guests and members of the Tianshi Distributor Family,

Thank you for this opportunity to speak at the Tianshi Development Seminar in St. Petersburg, Russia.

Bolshoi Spaciba.

I would like to congratulate Mr. Li and Tianshi for their success in Russia and around the world. Today, I would like to speak about trends in the direct selling industry around the world and why Tianshi is in a good position to be a part of those trends.

Biography and Introduction of Jeffrey Babener

Jeffrey Babener is the international legal advisor for Tianshi. He is an honors graduate of the University of Southern California Law Center in Los Angeles. His law firm is located in the United States. For the past 20 years, he has served as the legal advisor to many of the world’s largest and most prestigous network marketing companies, such as Avon of the United States and Nikken of Japan. He has written many books and his writings are read throughout the world. Together with Michael Sheffield, he is one of the founders of the Multi-Level Marketing International Association, where he has served as International Legal Counsel. For the past two years, Mr. Babener’s company has served as advisor to Mr. Li and Tianshi to help Tianshi establish its business in the United States and worldwide.

In particular, Tianshi is participating in three worldwide trends:
  1. The growth and interest in natural health products around the world.
  2. The growth in the direct sales industry in revenue and number of sales persons.
  3. The growth in the use of technology and the internet for communication and sales in the direct sales industry.

I am a lawyer from the United States, but I serve as advisor to some of the world’s largest network marketing companies, such as Avon of the United States and Nikken of Japan and the United States. For the past 20 years, we have helped to guide the growth of many international network marketing companies. We have advised almost all the major network marketing companies from Asia - Japan, China, Korea, Hong Kong, Taiwan and others as they as sought to establish their operations in the United States and North America.

Thus, it was our honor two years ago when we were contacted by Tianshi and asked to help establish their business in the United States and Canada. Based on their tremendous success in China and other countries, Mr. Li decided that it was time to enter one of the most imortant markets in the world, the United States. He had great vision to build a worldwide business and he was very correct to view the United States as a great opportunity for Tianshi and its worldwide distributors. In the United States, network marketing is a major industry. More than 10 million people are involved in a network marketing business, and the U.S. sales are more than $20 billion. In fact, 1 in 10 homes in America have an individual who is pursuing a network marketing opportunity. This makes America part of a worldwide industry with more than 30 million distributors and sales of more than $80 billion.

Mr. Li had great vision to bring thousands of years of Chinese experience in health to North America. The opportunity is unlimited. For instance, just over 10 years ago we assisted one of Japan’s health-based network marketing companies to expand to America, and since arriving, their health products have been warmly received by Americans and their business grew in America alone to approach a billion dollars a year.

Does Tianshi have the opportunity to have the same successful experience in America and the world? The answer is "Absolutely Yes". If Tianshi will work hard to understand the culture of each country and its market and to adapt the Tianshi opportunity to the American business model that has been so successful around the world for companies like Amway, NuSskin, Nikken and Herbalife, there is no limit to Tianshi’s opportunity.

Please let me address three worldwide trends that are favorable to Tianshi.

In recent years, there has been an explosion of interest in natural health products in America and around the world, and, in particular, Americans are very open to new approaches to health such as those offered by Tianshi. The evidence is that the market for natural health products, such as those offered by Tianshi, will probably grow by tens of billions of dollars every year for the next decade.

As to a second worldwide trend, the evidence is clear that the direct sales channel of distribution is growing at a fast rate around the world, perhaps faster than traditional retail distribution. Tianshi is in the forefront of this trend.

Several studies by the World Federation of Direct Selling Assoications have tracked this growth. For instance, between 1988 and 1998, worldwide sales grew from $33 billion to $82 billion.

In the same 10 years, the number of sales persons grew from nine million to 34 million. I have passed out a chart to you which shows the sales volume and number of salespersons for leading countries. Today, direct sales companies are operating in more than 140 countries with sales exceeding $80 billion and sales force approaching 40 million people.

And what is interesting is that these figures do not even take into account the growth in sales in what may ultimately be the largest market in the world, The People’s Republic of China, the headquarters of Tianshi.

In a recent speech at an academic conference in South America, Richard Barlett, the vice chairman of Mary Kay, projected that this growth will continue and that by the year 2007, worldwide sales would reach $200 billion and the number of salespersons would grow to 60 million people.

In fact, the U.S. Direct Selling Association predicted in 1998 that, over the next 10 years, more than 200 million people would be recruited to join a direct selling company.

As Tianshi distributors seek growth opportunities around the world, it may be useful to look at the leading factors that support recruitment and retention of sales force. Two studies were done in the U.S. by the U.S. Direct Selling Association. Although the U.S. experience may not be the same as in other countries, such as Russia and China, it nevertheless should be useful as recruitment strategies are developed.

The first study ranked the reasons why salespersons joined a direct selling company. The reasons were as follows:

  1. I like and believe in the product.
  2. I like being my own boss.
  3. I like working at home.
  4. The harder I work, the more I make.
  5. I enjoy selling.

The second study ranked the reasons why salespersons stay with a company:

  1. Favorable response to company products.
  2. Leadership of the company.
  3. Leadership of the field sales force, that is, the top distributors.
  4. The company purpose or vision.
  5. Good earnings.

Although these factors may rank differently outside the United States, they are still very useful because the American experience and the American business model has been the most successful around the world.

The current Tianshi worldwide business model is patterned after the most successful American companies. In addition, Tianshi seems to be a good model for reasons why distributors join and stay with companies.

One interesting study, also, was a survey of 500,000 Mary Kay distributors. In the survey, it was found that 1 in 10 recruits never really get started in the business. Companies can learn from this study that it is very important to support and encourage distributors once they have joined the business.

The final worldwide trend in which Tianshi is participating is the growth in the use of technology and the internet.

First there is a worldwide trend to international seamless sponsoring in which any distributor anywhere in the world can sponsor another distributor anywhere in the world. This was pioneered by NuSskin and now in use by companies such as Nikken as well.

Second, the technology has created the expectation that distributors should be able to access their information on sponsoring, commissions, recruiting, volume and downline reports anytime through internet access.

Third, worldwide distributors have come to expect a world class internet web portal for companies, which provides "in real time," and in an attractive format, communication on products, marketing program, ordering, research, company events and even integrated web sites for individual distributors.

As to all of the above, we have recently supervised on behalf of Tianshi the acquisition of state-of-the-art computer software and internet technology that will allow Tianshi and its worldwide distributors to accomplish all of the above objectives in the near future. Tianshi is working with one of the leading American computer companies that services some of the world’s largest direct selling companies.

In summary, Tianshi is at the forefront in world trends in health, marketing and technology. With the help of its worldwide distributors, Tianshi is in a good position to bring its message of health and opportunity to millions around the world.

During the past two years we have developed a close relationship with both Mr. Li and Tianshi. Mr. Li has used us as an advisor for Tianshi not only in North America, but also for his plans internationally for a worldwide business. In particular, he has worked closely with both my company and the company of Michael Sheffield in developing worldwide planning.

If you would like a copy of this speech, your will find it during the month of August at our website, www.mlmlegal.com and you will also find many other interesting articles about network marketing. Again that is www.mlmlegal.com.

On behalf of my company and Mr. Sheffield’s company, we look forward to celebrating the success of Tianshi in years to come.

Thank you very much. Congratulations.

Bolshoi Spaciba. Pastravlyu.

Jeffrey A. Babener
Babener & Associates
121 SW Morrison, Suite 1020
Portland, OR 97204
Jeffrey A. Babener, the principal attorney in the Portland, Oregon law firm of Babener & Associates, represents many of the leading direct selling companies in the United States and abroad.


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