Nu Skin new licenses for direct selling in China

By Andrew MCDOUGALL contact

- Last updated on GMT

Nu Skin new licenses for direct selling in China

Related tags: Direct selling, Multi-level marketing, License

Utah-based Nu Skin has received official notification from China's Ministry of Commerce of its approval to commence direct selling activities in five additional provinces and 30 districts. 

The provinces include Anhui, Gansu, Chongqing, Shaanxi and Yunnan, and the licensing process included a review of the company's operations.

It is the sixth time that the Ministry of Commerce has granted Nu Skin new direct selling licenses.

"We are pleased that China's government has granted us authorization to expand our direct selling activities into additional provinces and districts,"​ says Truman Hunt, president and chief executive officer.

"We believe the government's approval of our application is a reflection of our significant investment in China over the past several years, our commitment to enhancing the lives of China's consumers and our desire to be a constructive part of China's social framework.”

Growth potential

In 2012 direct selling in China saw strong growth of 20 per cent in value thanks to the government’s determination to standardise the market by issuing direct selling licences which provided a sound operational environment for industry players, and allowed direct sellers to develop the business.

As well as Nu Skin, cosmetics sellers such as Amway and Mary Kay have seen success with this model in China, and aim to do so in the future as the market shows good potential.

"We continue to build for the long-term potential of this important market and these new licenses allow us to further expand our direct selling coverage,”​ says Hunt.

“Additionally, in an effort to better support our sales force and consumers in China, we are accelerating our infrastructure plans, including tripling the number of stores and sales support centers by 2015, as opposed to 2017 as previously announced, and expanding our manufacturing capabilities within the market by the end of 2013.”

Confidence in market

According to market analyst Euromonitor, direct selling is expected to grow with a strong value CAGR of 9 per cent over the next five driven by a number of factors.

Firstly, Ministry of Commerce of China is likely to accelerate the direct selling licence approval process, which may help corporations obtain a licence more quickly, as Nu Skin have seen.

Secondly, many leading players, like Nu Skin and Mary Kay, have increased their investment in 2011 and 2012, indicating their confidence in the direct selling channel in China.

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