Nu Skin urges mainland government to reform rules on direct selling
US cosmetics firm Nu Skin Enterprises urged the central government to fine-tune its rules governing direct selling on the mainland as it pledged to strengthen supervision and training of sales staff in the rapidly expanding Chinese consumer market.
The Utah-based company, which was fined by mainland authorities for illegal sales practices, makes and sells anti-ageing and weight-loss products. It has teamed up with a clutch of US firms such as Amway, Herbalife and Mary Kay to lobby Beijing to revise the rules on direct sales.
"It has been 10 years since the publication of the first direct selling rule in China," said Vincent Cheng, Nu Skin China's vice-president. "Some of the restrictions have been a stumbling block to a healthy growth of the [market]."
Nu Skin hoped authorities could loosen regulations on marketing meetings.
"China is a gargantuan market and a restriction on the number of participants would be unnecessary if the meetings themselves are legal and constructive," Cheng said.
The mainland government imposed a US$540,000 fine on Nu Skin in March after an investigation found the company had sold certain items illegally while making product claims it could not verify.
Nu Skin denied the allegations of wrongdoing.
Andrew Fan, Nu Skin's China president, said the firm was "diligently committed to operational excellence in China, including complete compliance with business rules and regulations".
Admitting lax management and training led to new hirings' misunderstanding of its sales model and products, Nu Skin wasted no time in asking mainland authorities to review existing regulations on direct selling.
Beijing promulgated rules on direct selling in 2005, but businesses must comply with tight regulations owing to worries about pyramid scams where salespersons would enrol people by promising large kickbacks if they could entice others to join.