Seeking Alpha

Nu Skin skids as article questions sales practices in China

  • Nu Skin (NUS -17.7%) slumps on a negative article in People's Daily which is apparently quite critical of the company's sales practices.
  • In one particularly negative passage, a university lecturer likens NUS' tactics to mind control. Here's the quote, from a translation that appears on TheStreet: "Southwest University of Politics and Law Lecturer Hu Jiang believes that such acts alleged mind control, commonly known as 'brainwashing.'"
  • For its part, the company says the article "contains inaccuracies and exaggerations that are not representative of [its] business in China."
  • Also notably lower on the day: Herbalife (HLF -1.3%).
Comments (10)
  • Herbalifestudy
    , contributor
    Comments (177) | Send Message
     
    That paper is rather a policy communication tool for the regime. Detailed content not the most important. Could it signal a shift in china policy regarding direct sales and MLM?
    15 Jan, 02:37 PM Reply Like
  • powershake
    , contributor
    Comments (1434) | Send Message
     
    Bought more shares on misunderstanding of MLM's in China.There are no MLM's permitted in China, just retail stores of HLF.
    Controversy over NUS exist in China - BUT NOT with HLF
    The market has differentiated the two companies well. NUS -17% vs HLF -1.3%

     

    Barron's: Nu Skin: This Too Shall Pass?
    http://on.barrons.com/...
    15 Jan, 03:30 PM Reply Like
  • Kay Herbert
    , contributor
    Comments (951) | Send Message
     
    Looking at another 15% loss in NUS today yet Ramey told us yesterday that he thinks this latest episode will blow over. Bill Schmitz, another pro MLM analyst told us yesterday: " We view today’s pullback as a buying opportunity…"
    http://bit.ly/1b3Z9Bn
    16 Jan, 08:50 AM Reply Like
  • ProTruth
    , contributor
    Comments (311) | Send Message
     
    Citron Research has been covering this for a while:
    http://bit.ly/HsNGTI

     

    MLM not allowed in China, NuSkin says they are not selling the BizOp but they are lying. Lots of evidence that the BizOp is being pushed....pyramid shaped diagrams on cocktail napkins, etc. type of stuff.
    15 Jan, 04:35 PM Reply Like
  • iCon23
    , contributor
    Comments (56) | Send Message
     
    Hate to say it but the BizOp is the ONLY thing being pushed. I've sat through several pitches and they all spend 95% of the time talking about how you'll make big money. Ironically, I did get the pyramid on a napkin twice. The products themselves are a mere mention.

     

    That said, beliefs and opinions need to be absent when investing. Therefore, IF you are a NUS long, this recent pullback presents a huge buying opportunity.

     

    Disclosure: No position.
    16 Jan, 01:15 PM Reply Like
  • Herbalifestudy
    , contributor
    Comments (177) | Send Message
     
    @Protruth, a question, I just checked Citron research for the first time, a paper on NUS from October last year. It looked like ranting, unstructured and quite unprofessional to me - is it a well recognized outfit?

     

    Anyhow this will be something to keep an eye on.
    15 Jan, 10:38 PM Reply Like
  • awakeinwa
    , contributor
    Comments (308) | Send Message
     
    Google translate the article @http://bit.ly/1eEHMcR

     

    I understand Chinese. The video embedded with the People's Daily reporting is pretty much making hay out of nothing.

     

    First part asserts certain brochures sell more products than allowed by license - it's hearsay at best, and at worse easily remedied.

     

    Second part claims the two scientific papers in Nature cited by Nuskin doesn't absolute prove genetic lock works in humans. That is a false equivalency as those two papers are the basis by which ageLoc was made.

     

    Third critique is the glitzy sales conferences that seem to brainwash people.Sales conferences engender excitement and cite success; that is conflated into brainwashing is hyperbole.

     

    Fourth critique is advertising spoofing as People's Daily article with footnote that misuses the newspapers good name. More hyperbole it seems as the content is marked sponsored content.

     

    That the Chinese Commerce department issued a statement that they are investigating belies the possibility that this may be a nationalistic sideshow pressuring Nuskin aimed to extract some concession, currently unknown. But at face value, the reporting does not have any smoking gun evidence that any pyramid laws were violated.

     

    If anything, it's a tabloid piece full of innuendo that exaggerates effects of rather standard sales practices into something that it is not.
    16 Jan, 05:07 AM Reply Like
  • iCon23
    , contributor
    Comments (56) | Send Message
     
    You're widely correct but you're missing one key piece. The understanding of MLMs in China (at a citizen's level, if you would) is so incomplete that the business literally goes unquestioned.

     

    People in China tell me that others are jumping into the MLM model head first without understanding anything other than 'doing this will make me rich'. In China, it's seen as a free ticket to riches, so there is a certain amount of 'brainwashing' and euphoria surrounding NUS right now. This is entirely different than the U.S. market where people are skeptical of everything. The concern presented by the article, even if deeply one sided and incorrect, is that it can temper this unquestioned euphoria.
    16 Jan, 01:05 PM Reply Like
  • herbs4mike
    , contributor
    Comments (2078) | Send Message
     
    sounds like a good time to buy....
    16 Jan, 08:51 AM Reply Like
  • nguyendp
    , contributor
    Comment (1) | Send Message
     
    Pyramid scheme is still on earth? NUS is one of them. Maddox is dying in jail time. Member lost money and now staying on the street. NUS is needed to be justices.
    17 Jan, 01:39 AM Reply Like
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