Nu Skin's Growth Could Stall Under Chinese Scandal

The direct seller has warned the controversy will crimp sales
A Nu Skin convention in Taipei Imaginechina

Nu Skin Enterprises has 40,000 salespeople peddling weight-loss kits and skin cleansers in China. Sales on the mainland had been chugging along in recent years, reaching 30 percent of the Provo (Utah) company’s $2.16 billion in revenue for the first nine months of 2013. That growth is now threatened by the allegation in the People’s Daily on Jan. 15 that Nu Skin is operating a “suspected illegal pyramid scheme.” A day later, China’s State Administration for Industry and Commerce said it would launch a probe into the company’s operations. Nu Skin’s shares tumbled 38 percent in two days. “We are absolutely not a pyramid scheme,” says Chief Executive Officer M. Truman Hunt. “Nobody gets rich in our world by recruiting others and selling them on nothing but the income opportunity.”

To continue reading this article you must be a Bloomberg Professional Service Subscriber.