Nu Skin Enterprises provided an update on the regulatory reviews conducted by the Administration of Industry and Commerce (AIC) in Shanghai, where its China business is headquartered, and the AIC in Beijing, where the company maintains a branch office. These reviews were conducted under the direction of China’s State AIC.
As a result of the reviews, Nu Skin China was penalized in the amount of $524,000 (RMB 3.26 million) for the sale of certain products by individual direct sellers that, while permitted for sale in Nu Skin China’s retail stores, were not registered for the direct selling channel. Nu Skin China was also fined $16,000 (RMB 100,000) for product claims that were deemed to lack sufficient documentary support. The company understands six of its sales employees have been fined for unauthorized promotional activities in an aggregate amount of $241,000 (RMB 1.50 million). In addition, Nu Skin China was asked to enhance the education and supervision of sales representatives. The company is already taking steps to correct the issues raised in the AIC reviews, and is not aware of any other material enforcement investigations currently pending in China.
As announced on January 21, 2014, Nu Skin China voluntarily suspended business promotional meetings and applications for new sales representatives to fully cooperate with the regulatory reviews. The company is working diligently to enhance sales representative training and supervision, and will seek direction from the Chinese government with respect to resuming normal business activities.
“We continue to believe in the potential of China’s large and growing market,” said Dan Chard, president of global sales and operations. “We remain committed to working cooperatively with the Chinese government to ensure the healthy, long-term growth of our business.”