Hebei-born Li Jinyuan dropped out of school at the age of 14 to become one of the youngest workers at an oil field in the province. Two years later, he went against the spirit of the times by going into business during the Cultural Revolution, selling food, radios and clothing on the black market. By the early eighties, he had made Rmb400,000 ($61,000), a small fortune, but most of the profit was lent out and never returned.
Li had to start again. He established a flour mill, the forerunner of Tiens Group. His next venture produced health products, derived from items such as ginseng. He pumped Rmb20 million into the company but sales failed to meet expectations.
In 1994, Li changed his product focus and his sales strategy: ginseng was replaced by a calcium supplement, and advertising agencies were abandoned for a direct sales network. Within three years, he had assembled an army of three million salespeople, selling health supplements door-to-door. This time, the venture turned a serious profit. In the 18 months up to mid-1997, Tiens made Rmb639 million in net income.
Then disaster struck in 1998, when direct sales companies were banned (a response to a crop of pyramid-selling schemes collapsing around the country). In order to maintain the relationship with his sales force, Tiens was forced to buy back his product range.
While Li was restructuring his domestic business into a more conventional retail operation, he decided to look abroad. In 2001, he started selling in Russia. The Ukraine, Hungary and Poland soon followed. Overseas markets now account for more than 60% of Tiens Group’s revenue.
Need to know
Tiens Group is now a multinational involved in a wide range of sectors – such as hotels and tourism, health management, and biotechnology. In 2003, Tiens listed in the US via a reverse takeover.
Despite the diversification, Tiens is still best known for selling dietary supplements and wellness products. And it went back to its roots in March, when it received a licence to resume direct selling, with approvals to sell 25 kinds of health food.
Li Jinyuan is China’s 38th richest person, with a Rmb20 billion fortune, according to the 2010 Hurun Rich List.
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