Nu Skin Enterprises Inc. said Nu Skin China was fined in the aggregate of $540,000 in connection with the sale of certain products.
The fines — following a review by the Administration of Industry & Commerce in Shanghai, where Nu Skin China is based and the AIC in Beijing, where Nu Skin has a branch office — included $524,000 for certain products sold by individual direct sellers who were unregistered for the direct-selling channel and $16,000 for product claims that were deemed to lack sufficient documentary support.
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The Provo, Utah-based firm also said that six sales employees were fined in the aggregate of $241,000 for unauthorized promotional activities. The company said it was asked to enhance the education and supervision of its sales representatives.
Nu Skin said, “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.”
Nu Skin in January voluntarily suspended business promotional meetings and applications for new sales representatives to fully cooperate with the regulatory reviews. The company said it 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.”
Stifel’s analyst Mark S. Astrachan said the resolution of Nu Skin’s China issues is a “positive, in our view, given it could indicate a path towards resuming normal activities in the market. Mainland China accounted for 32 percent of 2013 sales and 60 percent of company sales growth from 2011 to 2013.”