Nu Skin Sees Benefit From China Policy Shift
SHANGHAI — Nu Skin Enterprises is prepping for a new focus in China.

The Provo, Utah-based beauty company — known for its direct sales-driven approach worldwide — has been required to rely only on stand-alone stores on the Mainland since it entered China’s retail market in 2003.

But a policy change announced last month by the Chinese government will soon allow direct sales in China, and Nu Skin is preparing to be among the first to take advantage of the new regulations when they go into effect Dec. 1.

The new policy — which removes a 1998 ban on direct sales in China — also is expected to benefit other direct-sales-focused beauty companies such as Amway and Avon, both of which have been forced to rely on stand-alone stores to penetrate the growing beauty market in China.

Avon already has a slight head start on the competition, as the company received special permission to test direct sales in a few markets starting last spring.

But while the policy changes will bring in more competition, Nu Skin representatives predict direct sales will further boost what is typically a booming China market for the brand.

“China has become a huge market opportunity,” said Ritch Wood, chief financial officer of Nu Skin. “It holds all the potential to become our largest market at some point in the future — whether that will be in three years or 10 years, we don’t know yet.”

In 2003, Nu Skin, which currently operates 150 stand-alone stores across the country, had $38 million in sales on the Mainland. In 2004, that number had nearly tripled to $106 million, making China the company’s third-biggest market and the source of 9 percent of all company sales.

Now, company representatives are expecting sales in China to jump even more — to up to $150 million in 2006, according to Corey Lindley, the Shanghai-based president of Nu Skin’s Greater China operations.

Although direct sales will be a new experience for many of China’s newly rich consumers, Lindley expects the sales tactic to resonate with the country’s consumers, who are accustomed to relying on personal relationships to do business. “Unlike other markets, personal relationships are a very important aspect to business in China,” Lindley said. “Direct sales are a natural fit for doing business in China.”

This story first appeared in the October 18, 2005 issue of WWD. Subscribe Today.

Still, the company will have to wait a little longer to fully see the results of the new regulations. Nu Skin will not be able to start China’s rigorous direct-sales registration process until the policy change goes into effect on Dec. 1. And, the first wave of next year’s expected fleet of 15,000 to 20,000 direct-sales agents won’t be trained and on the ground until the end of the first quarter of 2006.

In the meantime, the company is hoping their current stable of 150 stand-alone stores will help set a foundation for the future expansion. “Chinese consumers are interested in the very best products, and our more expensive [stockkeeping] units have been the biggest sellers here,” Lindley said. “It’s a very good indication of the market’s future promise.”
— Betsy Lowther

Revlon Names Garment VP
NEW YORK — Revlon has expanded its product development team as it readies to unveil the company’s two biggest initiatives for next year. On Monday, Revlon stated it named Sharon Garment vice president of product development last month. In her new role, Garment oversees the company’s product development efforts across all Revlon Inc. brands. She reports to Carolyn Holba, Revlon’s vice president of marketing.

Prior to her appointment, Garment ran her own consulting business, which involved developing cosmetics and skin care product lines. Her career in product development spans about 20 years and includes posts at Mana Products, where she is credited with developing the Black Opal cosmetics line, and at the Estée Lauder Cos., where she was vice president of global product development for the Estée Lauder brand.

“Sharon brings considerable experience in all aspects of product development — including formulations, packaging, merchandising and display — to a crucial position within our organization,” Holba stated.

Prix Liliane Bettencourt Awarded
PARIS — Metal craftsman Bernard Solon was awarded the Prix Liliane Bettencourt last week by French billionaire Liliane Bettencourt, the daughter of L’Oréal founder Eugene Schueller. The Foundation Bettencourt Schueller, founded in memory of Schueller, has honored a group of artisans each year for the last six years.

Presenting the winner with a check for 50,000 euros, or $60,360 at current exchange, as well as 5,000 euros, or $6,036, to each of four runners-up, Bettencourt paid tribute to the talent of France’s artisans. “I would like to express our admiration, loyalty and gratefulness to the talent of the artisans of our country,” she said. Next year, the prize is to be awarded to artisans who work with precious metals.

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