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Probe on Nu Skin's allegedly illegal acts

Shanghai Daily, January 17, 2014

• The government will investigate media reports alleging that direct selling personal care company Nu Skin Enterprises is operating a suspicious illegal pyramid scheme, which the firm denies.

  The State Administration for Industry and Commerce said in a statement on its website yesterday that it's treating the allegations seriously and will ask local industry and commerce bureaus to investigate.

  The administration said that if what has been reported turns out to be true, it "will deal with it according to the law and regulations."

  The Ministry of Commerce has also noticed the reports and is verifying the details, spokesman Shen Danyang said yesterday, adding that any illegal business activities will be investigated by authorities.

  The People's Daily's reports claimed the US firm is operating under a suspicious pyramid scheme.

  The newspaper also pointed out other alleged misbehavior, including misleading advertising and marketing practices.

  But Nu Skin said in a statement on its website yesterday: "The People's Daily article contains inaccuracies and exaggerations that are not representative of Nu Skin's business in China and we do not believe that the article was the result of any particular government inquiry."

  "We are dedicated to operating in full compliance with applicable regulations by the Chinese government," Nu Skin said.

  The newspaper reported that buying 500 yuan (US$82.54) worth of Nu Skin products is a prerequisite to becoming a distributor, and that distributors are then encouraged to develop more lower-tier distributors, a feature of multi-level marketing, which is banned in China.

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