Following its Greater China leadership conference, Nu Skin (China) announces initial details of its five-year business development plan for mainland China. The plan includes tripling the number of stores and sales support centers by 2017 and expanding its direct selling coverage and distribution model to generate higher levels of market penetration.
“With nearly a decade of operational experience in China, we are building on a foundation of success to sustain growth in this important market,” said Andrew Fan, president of the company’s Greater China region. “In terms of infrastructure, our plans include increasing our physical presence in the market by tripling the number of stores and sales support centers, as well as completing our previously announced, $55 million innovation park and Greater China regional headquarters in Shanghai.
“Additionally, with recently issued direct selling licenses in several provinces, we plan to significantly expand the direct selling side of our business,” continued Fan. “Based on market research and continuous consultation with government authorities, we plan to extend the company’s product distribution channels to include independent business operators who operate with established business licenses. We will develop this additional distribution channel in a fashion consistent with what the direct selling industry offers in China. Our efforts are designed to align with the government’s Twelfth Five-Year Plan to support a consumption-driven economy and to increase employment opportunities.”
Nu Skin’s physical facilities plan includes updating existing outlets throughout China and expanding physical locations, with the goal of tripling the number of stores and sales support centers over the next five years. These physical locations will increase Nu Skin’s presence over a wider area, providing more effective and comprehensive services to consumers and support to the different channels of product distribution throughout China. In addition, to support growing business needs, Nu Skin has initiated the construction of a new innovation park in Shanghai, which will include a new research and development center and increased manufacturing capacity, as well as an experiential and sales support center and regional management offices. This facility is scheduled for completion near the end of 2013.
Because the geographic scope of its direct selling licenses has been limited, Nu Skin’s focus to date has been on its employed sales force channel. Now that the company has been approved to conduct direct selling over a sufficiently broad geographic area, and with the advice of China regulators, Nu Skin plans to expand its direct selling operations. The company also continues to work to expand the number of direct selling licenses in additional provinces.
In order to reach further into the unique China marketplace, Nu Skin also announced plans to expand its distribution with the addition of independent marketers to its existing multi-channel business model. These legally registered independent business operators are widely used within the direct selling industry in China and would be authorized to operate sales businesses that provide a variety of products and services under the scope of their business licenses. Consequently, the business model of Nu Skin in China will include:
- Employed and contractual sales people who sell products from stores;
- Direct sellers who sell products away from stores; and
- Independent marketers who will sell products from their own place of business.
“We believe that the expansion of our distribution alternatives in China will effectively supplement our current distribution channels in this unique marketplace, offering additional business and employment opportunities, improving people’s livelihoods, and paving the way for our long-term, sustainable growth in this important market,” concluded Fan.
Nu Skin initially commenced operations in China in 2003 with retail stores and employees. In 2006, the company received a direct selling license from the Ministry of Commerce of the People’s Republic of China, and was permitted to begin direct selling in Shanghai. The company has since received direct selling licenses in over 50 cities or districts covering 15 provinces.
