Sunrider - More Than Two Decades of Success
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Today Sunrider sells product in more than 30 countries through millions of distributors, and has nearly 6,000 retail outlets in China alone. This is an amazing story for a company that started in 1982 as the dream of two people, Dr. Tei Fu Chen and Dr. Oi-Lin Chen.

The company we know as Sunrider International is the direct successor to Natural Life, a small herbal company in Orem, Utah. Utah County has become a hub of herbal manufacturing and Direct Sales companies: Natures Sunshine, Enrich, Nuskin, Usana, TwinLabs, Neways, 4life, to name a few. So it was more that a touch of fate when Tei Fu Chen, who had always been interested in herbs ability to “regenerate” the body, decided to move to Orem when he immigrated from Taiwan in the late 1970’s.

By 1982, Tei Fu Chen was working with Natural Life when he decided it was time to put into action his plan to create the company of his dreams. His first move was a good one. He purchased Natural Life and renamed it Sunrider. Even though Natural Life was small, it was stable, and had an established distribution network. this gave Chen a place to start<.> For the first couple of years, Dr. Dean Black, the President of Natural Life, stayed to help with the transition of Natural Life to Sunrider.

This move helped Sunrider avoid much of the pain that many startups suffer to get their systems and policies in place. Chen immediately went about building a line of Sunrider products that came from China that were based on traditional Chinese herbal knowledge accumulated over thousands of years. His timing could not have been better. American society’s attitudes were changing in two very important and helpful ways for Sunrider:

• For a long time ‘Made in China’ meant cheap transistor radios, fireworks, or other disposable items. But by the 1980’s, Made in China started to mean 5,000 years of knowlegde about the body and the mind living in harmony with nature combined with a capitalistic, entrepreneurial spirit.
• Treatments like acupuncture and herbal medicine were gaining credibility even in mainstream culture.

With perfect timing, Sunrider built a product line based on these Chinese philosophies. In addition to this, they implemented a stair step breakaway plan which was very popular at the time. Additionally, unlike Meadow Fresh that required $30,000 of group volume in one month to reach the sales leader level, Sunrider allowed a distributor to achieve the rank of Sales Leader with $4,000 of group volume accumulated over any length of time. This allowed a distributor to build up a “book” of retail customers who purchased product over a several month period, and all of the sales of these customers would help the distributor become a sales leader. This was considered quite innovative at the time.

Sales grew steadily, and by 1987 Sunrider was in true hyper-growth mode. Sunrider was not only successful in the United States and Canada, but was almost immediately successful in the Chen’s native country of Taiwan. When Sunrider opened in Taiwan, many American distributors wondered how the company would be successful in a country that had an herb shop on every corner. To compensate for this fact, Sunrider Taiwan emphasized the fact that they were a company with traditional Chinese values and products, but had American production and quality control standards, and most importantly, it was bringing the American dream to Taiwan. One example of this nuance is in America much of Sunrider’s literature was designed around Chinese characters to re-iterate the fact that this company was built on a 5,000- year- old Asian culture. In Taiwan, a rearing black stallion appeared on much of the literature, denoting the unbridled freedom of the American dream. This has always been one of Sunrider’s strengths, making sure that its basic message, regenerating the body through whole foods, has never changed their nearly 25 year history. By 1987, Sunrider was settled in Torrance, CA. Company sales (which have never been officially published) were in excess of $100 million a year. But Sunrider was about to enter a turbulent time in their history.

As with so many companies, Sunrider had approximately 100 products, but it had a half a dozen flagship products. Of these products, Nutrien Concentrate was one of their two best selling products. The rapid growth of Sunrider had taxed production capabilities, and in a routine test, Nutrien Concentrate was found to contain salmonella. This was damaging to the company, slowed the growth, affected the distributors, and would have destroyed some companies, and as is typical in such cases it took a few weeks for the size of the problem to sink in.

Once it did, the Sunrider style of handling a problem like this was apparant and impressive. They approached the problem from several simultaneous approaches:

• They found and retained the most renowned expert on salmonella contamination in the country.
• They hired a new senior in-house attorney for the company whose experience had been in government. He was brought in to work with the various government agencies to reach a settlement, not fight in court.
• Their researchers worked on a reformulation for the product that did not use soybean, the ingredient that had been contaminated.
• They recalled and refunded (or replaced with other products) all Nutrien in the field. However, they did it in a way that did not create immediate take- back commissions from the upline, which would have created financial chaos for the field.

In the end, they agreed to replace Nutrien with a different formulation, and built a new world- class production facility almost overnight to manufacture the new product in. A problem that has destroyed other companies, or can take many months or years to solve, was basically resolved in a couple of months.

One problem Sunrider faced in the 90’s was legal issues surrounding taxes and customs. The basic problem is a surprisingly common one for multi-national companies. The scenario is thus: ACME Inc. makes widgets in the North Pole. Labor is cheap there so they can manufacture widgets for $1.00. They import them to the USA and sell them for $10.00. ACME has two companies, ACME NORTH POLE, and ACME USA. The North Pole is in a business-friendly country, so it has a flat tax of 10% on profits. By the time the United States government and other state and local governments collects their tax, a corporation will pay 40-50% in tax. So it seems easy enough.

When ACME NORTH POLE “sells” the widgets to ACME USA, they sell them for $9.00 each. ACME USA actually loses money, but ACME NORTH POLE makes a lot of money, and ACME keeps its profits in the NORTH POLE, where they wanted it anyway. That method of moving money is called Transfer Pricing. The IRS and US Customs Department expect that when multi-national corporations sell products across international borders to themselves, they will set reasonable transfer prices so that each country gets a reasonable share of the profits based on its share of the business transaction.

In order to accomplish this it takes a lot of coordination between the accounting departments of the various units of a multi-national company. Many people believe the IRS will subpoena first and ask questions later, or the IRS believes all companies try to hide profits. After the scandals on Wall Street over the last few years, it’s hard to blame the IRS if they really have that attitude.

But when you have a rapidly growing company like Sunrider, it is a lot of work to keep up with the day- to- day issues arising from growth, and Sunrider was investigated for all of the issues surrounding transfer pricing, and it would seem they were not prepared for it.

By the mid-1990’s, Sunrider paid over $100 million in back taxes, penalties, and dealt with other court ordered sanctiouns to settle these cases. However, through it all, Sunrider had continued to expand internationally.

What started as a small stream of expansion in the late 1980’s became a flood in the early 90’s. In 1987, Sunrider was doing business in four countries. In 1994 it was up to fifteen countries. Now, 10 years later, we find Sunrider in thirty countries.

What has allowed Sunrider to survive the trials that any company experiencing hyper-growth faces, is that it found the right message early on and has stayed true to it. The message of Sunrider is:

“Combining Chinese and western medicines, Dr. Tei Fu Chen developed the Philosophy of Regeneration, the basis for all Sunrider® products. The Philosophy of Regeneration is the belief that our bodies have the necessary tools to maintain and regenerate themselves. Sunrider® products are designed to nourish and cleanse the body-to keep a balance between yin and yang and the body's five systems.”

This message has not changed in nearly 25 years. When you go to any one of Sunrider’s offices around the world you will find this basic message. However, Sunrider has tailored this message for each country and culture you find their offices. It would seem this is what has made Sunrider survive and prosper when so many others have fallen by the wayside.