Round table | Atomy sustainability management analysis

100 years of future business with “Absolute Quality, Absolute Price”

Atomy became the largest network marketing company in Korea in a matter of two years following its founding in 2009. In 2022, sales exceeded KRW 2.25 trillion (preliminary), continuing a 13-year growth streak. It has expanded operations to 25 countries worldwide and was named among the top 10 global direct selling companies. Atomy CEO Han-Gill Park, Ewha Womans University Business Administration Professor Jeong-Koo Yoon, and Korea University Law School Professor Young-Hong Choi (President of the Korean Distribution Law Association) found Atomy’s sustainability lies in its “competitive advantage” and “presence advantage.”

On December 7, at the Atomy headquarters in Gongju, South Chungcheong Province, a round table discussion was held with Ewha Womans University Business Administration Professor Jeong-Koo Yoon, Atomy CEO Han-Gill Park, and Korea University Law School Professor Young-Hong Choi (from the left).

For some time, network marketing was found to be an unsustainable industry. According to Fair Trade Commission data, from the founding of the Mutual Aid Cooperative Consumer and Korea Special Sales Financial Cooperative Association in 2002 until 2021, 577 network marketing companies were registered with the Fair Trade Commission and their respective municipalities, but the average longevity of these companies was only 3.4 years. Despite this, Atomy, the largest network marketing company in Korea, is creating a buzz in the industry with its 13-year growth streak.

Atomy currently operates in 25 countries worldwide, including Korea, United States, Japan, Malaysia, Australia, United Kingdom, Kazakhstan, and China, among others. With 15 million members, it recorded sales of KRW 1.2 trillion in 2018, KRW 1.9 trillion in 2020, and KRW 2.25 trillion in 2022 (preliminary). Its main products are cosmetics and health functional foods, including HemoHIM, an immune-boosting health functional food with annual global sales exceeding KRW 370 billion. Atomy also ranked in the top 10 on the 2021 DSN Global 100 list compiled by the US magazine Direct Selling News.

It is important to note that Atomy is the first company in the network marketing industry to demonstrate sustainability through Consumer Centered Management certified by the Fair Trade Commission. This is also the reason why Forbes Korea arranged a round table to analyze the factors driving Atomy’s sustainable growth. The goal was to determine how Atomy differed from other companies in its growth strategy, and how its efforts were aligned with its products and organizational structure.

Atomy CEO Han-Gill Park , Ewha Womans University Business Administration Professor Jeong-Koo Yoon, and Korea University Law School Professor Young-Hong Choi participated in the round table held at the Atomy headquarters in Gongju, South Chungcheong Province on December 7. “I dove into it with the idea of materializing the wonderful distribution system of network marketing that I read about in books, and it seems that the experiment has panned out. Consumer-centered network marketing, which entails customer success and “Absolute Quality, Absolute Price,” has enabled us to maintain sustainable growth,” CEO Han-Gill Park explained.

“Atomy was able to succeed by overcoming the issues that arise within the pyramid structure of existing network marketing companies, thus creating an environment of profit sharing. It can be considered a righteous company, that is, one that fulfills its duties with regard to its corporate objective,” said Professor Jeong-Koo Yoon. “Distribution becomes a beneficial and sustainable industry when it benefits producers, consumers and distributors alike. Unfortunately, however, not many companies adhere to these principles. Atomy is unique in that it continues to grow while striving to reach its noble objectives,” said Professor Young-Hong Choi. The round table was moderated by Forbes Korea Editor-at-large Cho Deuk-jin.

‘The genius of the AND Strategy’ with both quality and price

Atomy CEO Han-Gill Park

A scene from the 2019 World Federation of Direct Selling Associations (WFDSA) Forum in Mexico. At the WFDSA CEO Council attended by CEOs of network marketing companies that exceed sales of KRW 1 trillion, including Amway, Nu Skin, and Herbalife, CEO Park remarked, “Is network marketing really big business? I don’t see it that way.” "Amway was founded around 60 years ago. About a decade later, Walmart arrived and, some years after that, Amazon. Walmart and Amazon are currently competing around the KRW 600 trillion mark in sales, but industry pioneer Amway is only at the KRW 10 trillion level. Can it still be considered big business?” asked CEO Park before going on to say, “I don’t see you as competition. Atomy is a company that was formed with the intention of competing against big-box stores, television-based home shopping and online stores on the basis of quality and price.” He emphasized the catchphrase: “Network marketing history will be written by Atomy.” Atomy, which ranked 20th on the DSN Global 100 list at the time, joined the top 10 only two years later.

Moderator: Is it really possible to compete with Walmart?

CEO Han-Gill Park (hereafter Han-Gill Park ): “Atomy has the advantages of network marketing companies and ordinary distribution companies at the same time. In addition to the competitive advantage of quality and price unique to our products, we have the added competitive advantage of “income generation opportunity” as well. We compete with ordinary distribution companies based on this.” Most would scoff at the mention of competing with Walmart. However, Walmart was founded 40 years before Atomy. If Atomy continues to grow 15% annually for the next 40 years, it will reach a similar scale. Since its founding, Atomy’s annual growth rate has exceeded 33%.

Moderator: What is the source of this confidence?

Professor Jeong-Koo Yoon (hereafter Jeong-Koo Yoon): Atomy’s competitive edge can be broadly defined in two ways. The first is competitive advantage. Atomy has an industry-leading competitive advantage in terms of technology, derived from constantly updating its most basic strategy of “Absolute Quality, Absolute Price.” The second is presence advantage. Many people enjoy success on Atomy’s platform, in line with its self-declared corporate objective of “democratizing success.” These two elements of Atomy’s competitive edge are seen to be woven seamlessly into its unique corporate tapestry.

Han-Gill Park : We eschewed the typical differentiation of marketing on the basis of quality or price and instead opted for ‘The genius of the AND’ strategy. It was a decision to focus on both quality and price. First, we ensured competitive pricing through mass production. Atomy has one single model of toothbrush, which allows more efficient production and easier quality upgrades. We also helped our partners reduce costs by streamlining processes and making payment in advance. We exceed KRW 5 billion in sales per employee. This is all thanks to the successful implementation of a system that automates repetitive tasks wherever possible, and spurs employees into increasing productivity.

Moderator: Isn’t it difficult to focus on both quality and price?

Jeong-Koo Yoon: It can be seen as the outcome of “price leadership” resulting from a leader with a background in production sites, paired with an innovative distribution system. It is a case of seamless implementation of the “Absolute Quality, Absolute Price” strategy. Another contributing factor is the corporate culture of continually striving to maintain quality standards. The most important takeaway is increasing value by constantly sharing this strategy with individual business members consisting of both members and consumers.

Professor Young-Hong Choi (hereafter Young-Hong Choi): Actually, Atomy can be seen as somewhat of a unique company. Although it consists of a group of individual business members, it constantly strives to reach its noble objectives using the organization’s strengths, while seeming to grow continuously by all appearances. Sustainability is a key aspect of any company, even more so for network marketing companies, since they are the sum total of their sellers’ individual business. As soon they go bankrupt or shut down, all the hard-earned individual business of their sellers goes up in smoke.

Consumer Centered Management recognized by the Fair Trade Commission

Ewha Womans University Business Administration Professor Jeong-Koo Yoon

Atomy is creating a big buzz in the financial community with its donation relay. On August 19, Atomy and its CEO Han-Gill Park each donated KRW 7 billion for a total of KRW 14 billion to Compassion, an international child sponsorship organization. Donations to Compassion Korea alone amount to KRW 30 billion to date, with previous donations of KRW 12 billion in 2021 and KRW 6 billion in early 2022. Donations go to children in countries where Atomy has a presence, including Thailand, Philippines, Colombia, Brazil, Indonesia, and Mexico, as well as others in Asia, Central and South America, and Africa. Atomy’s donations rank among the largest, not only in the network marketing industry, but in the distribution industry as a whole. According to CEO Score data, the percentage of Atomy’s donations in relation to its net sales was 2.04% in 2021, the highest recorded among the top 500 companies in Korea.

Moderator: Where does this spirit of sharing come from?

Han-Gill Park : We make a habit of donating. As the old saying goes, “Wealth should be equal like water and people should be fair like balances.” Money is like water in that it goes away the more it accumulates and it returns substantially the more it is given away, which I believe is both a right and an obligation. It’s not about contributing to society as a result of making money but making money in order to contribute to society, given that corporations are a part of society rather than separate entities. Atomy’s philosophy of giving consists of sharing small things with those who are close to us right now rather than big things with those who are far away at a later time.

Jeong-Koo Yoon: Within and outside the financial community, there is a self-deprecating perception that CSR is a form of insurance, but Atomy’s charitable activities are increasingly expanding and differentiated in terms of scale and focus. I guess you can say that spirit is truly felt. Atomy is regarded as a company whose management aims to actively exercise its right to share.

Moderator: Atomy was the first in the industry to be certified for Consumer Centered Management. What does this mean?

Han-Gill Park : In 2019, we were the first in the network marketing industry in Korea to receive Consumer Centered Management (CCM) certification that is administered by the Korea Consumer Agency and granted by the Fair Trade Commission. It is incredibly inspiring, considering the public perception of network marketing as being removed from consumer centricity. This is all thanks to the maximization of customer convenience through digital transformation, whether it’s the customer-centered restructuring of the global Voice of the Customer (VOC) system or customer ombudsman system, the implementation of an employee code of conduct, and the familiarization of all employees with Consumer Centered Management. At the end of the year, we went beyond certification and received a Fair Trade Commission award in recognition. Award ceremonies are usually attended by the CEO, but I plan to go myself since it is a special award presented by the chairman of the Fair Trade Commission (laughter)

Moderator: Professor Choi, you gave Atomy the Most Innovative Distribution Award when you were president of the Korean Distribution Law Association in 2018.

Young-Hong Choi: Out of all the distribution channels in Korea, only one company receives the award every year. It was the second annual award, which had gone to GS Retail the previous year. There was controversy within the association at the time we assessed market share, consumer perceptions and long-term growth potential. Atomy was not as well-known as it is today, and public distrust of multi-level marketing companies was quite common. However, the association held CEO Park’s entrepreneurial spirit and management philosophy in high regard, and saw the potential for worldwide growth. I remember what Mr. Park said at the time he received the award. “This award is a springboard for us to further strive in the name of consumers, the welfare of our employees, and our contribution to society.” Atomy’s consumer-centered network marketing can be considered the democratization of distribution in which producers, distributors and consumers all become owners.

Extraordinarily ordinary desire for the success of all

Korea University Law School Professor Young-Hong Choi

Professor Jeong-Koo Yoon defined Atomy as a “righteous company” in “The Sustainability Lab in the Age of Super Volatility, Uncertainty, Complexity, and Ambiguity,” published in May. “How is Atomy representing the global ESG principle?”is the subtitle of the book, which describes Atomy’s process of living up to its founding philosophy. The “righteous company” he speaks of refers to a company that fulfills its duties with regard to its unique corporate objective of pledging to co-evolve with its ecosystem to make it a better, healthier and happier place to work by innovating its professional competence to create a level playing field where discrimination and bias at higher levels are reduced.

Moderator: The concepts of a righteous company and co-evolution seem unfamiliar.

Jeong-Koo Yoon: Atomy is demonstrating sustainability by inviting the customers and members that participate in its ecosystem to be central figures of cooperation at the festivals held on its premises. The first element is the policy of inclusive growth. Whether it’s a policy of “one product, one company,” cash payment within one week of delivery, bulk purchase of raw materials, or interest-free financial support for process improvement funds, Atomy supports the development of its partners as if they were its own businesses. The second is the policy of sharing, and the third is the corporate management objective of member success. In sum, Atomy is a righteous company because it co-evolves with all the components of the Atomy ecosystem, including partners, consumers, and members.

Han-Gill Park : Long-standing companies co-evolve with their surrounding ecosystems. We call our vendors “partners” because they and Atomy are not two separate entities, but rather one and the same enterprise that join forces together. Not only that, there are various member training systems in place to ensure the success of our sellers, who are both customers and marketers, including the ABR course, One-day Seminar and Success Academy. This endeavor to grow and co-evolve together is the secret to maintaining a 0% return rate, despite our policy of unlimited returns within 3 months that is in place to this day, ever since our founding.

Moderator: The ESG report is coming out soon.

Han-Gill Park : I really want to applaud ESG for being a hot topic in the business world. Companies should not be mere instruments of profit, but rather clearly demonstrate their existence value far and wide, by virtue of their existence alone. We must secure sustainability by demonstrating our existence value with employees, consumers and partners, and by paying our fair share of taxes. How can companies last if their only focus is immediate gain as if to take advantage? In the first quarter of the new year, we plan on presenting the Atomy ESG report.

Young-Hong Choi: In the past, sustainability was assessed with a focus on financial aspects, but the focus is now shifting to how much companies benefit society and the environment. As organisms, companies have a responsibility to protect the planet and nature, as well as to support the development of human society. Atomy states that sharing is not a corporate obligation, but a right. One can say that this plainly demonstrates Atomy’s sustainability.

Moderator: Atomy has a unique organizational system, including Chutzpah and Amoeba.

Jeong-Koo Yoon: Atomy as a whole is similar to a laboratory when it comes to how the company works. There are many processes where there is no predetermined solution to the work and they instead think up a solution first before it is presented as such to others. Since there is no precedent, Mr. Park created it conceptually and I believe countless experiments are performed to reach a solution. This culture makes Atomy a superorganism with excellent antioxidant properties.

Young-Hong Choi: Employees are delegated a high level of authority when you look at Atomy’s internal organization. Although there is some risk involved with agent pushback and proxy costs, the positive effects outweigh such risk factors, enabling Atomy to grow continuously. Conventional legal experts find this unusual. The ordinary desire for the success of all, agreed upon within and outside the organization, is believed to make Atomy an extraordinary entity.

“The manager’s role is to share profits”

From a local event in Malaysia in November. Atomy launched operations in Malaysia in 2016. On August 19 of last year, Atomy CEO Han-Gill Park donated KRW 14 billion to Compassion Korea in the name of children suffering from war and hunger. / Photo: Atomy

Moderator: What is the strategy for the global market and for drawing in Generation Y and Z?

Han-Gill Park : Atomy is currently pursuing digital transformation. We will make it simpler and easier for members and consumers to enjoy Atomy products and services, and I believe this process will naturally attract younger generations. The important thing is that no change of any kind will force us to change this principle. Companies that put customers first and distribution that benefits consumers will always survive. To this end, we will adhere to the principle of “Absolute Quality, Absolute Price.”

Jeong-Koo Yoon: Success is ultimately determined at the global level, so a more aggressive market penetration approach is necessary. It is also important to reinforce marketing by combining brand elements of the Korean wave, known as Hallyu, with Atomy products. From a strategic management perspective, Atomy’s network marketing ensures cooperation and longevity by constantly connecting, building bridges, and conveying a common vision for the future. Mr. Park is constantly meeting partners overseas in order to bring such things under control and strengthen networks.

Moderator: What does it take to make dreams come true with Atomy for you?

Han-Gill Park : As a manager, my role is to make sure that profits generated are properly distributed. Atomy’s founding philosophy is survival, speed and balance. First, going under does too much harm all around. Companies should not fail. Next, we should move at a fast pace, but together. Balance entails the concept of sustainability. It is about sharing the value added horizontally and vertically, with all parties involved. This is what generates the power to control it. It is very important for managers to share with producers, consumers, distributors, employees, and even the socially disadvantaged, in a well-balanced manner. Atomy was founded with this idea in mind, which remains the case to this day.