The Chinese Government Vs Nu Skin – 21 Jan 2014

Posted on January 21st, 2014 in Caution Ahead, Food for thought

 

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The Chinese government is investigating whether direct sales cosmetics company Nu Skin Enterprises (Nu Skin) is an “illegal pyramid scheme” that brainwashes its Chinese direct selling sales troop.

Prior to the investigation, the Communist Party-owned People’s Daily, disturbed by Nu Skin’s highly charged sales seminar had accused Nu Skin of fraudulently exaggerating the youth-regeneration benefits of its products and promoting a cult-like enterprise controlling middle-class Chinese consumers.

Critics of direct sales companies have long pointed out that they are essentially pyramid schemes, that rely more on recruiting new salespeople and selling the products to them rather than unrelated customers.

As the pressure mounts, similar MLM companies such as Herbal Life, which also has a large presence in China has seen their share prices tumble in the past week, as activists and their victimized former direct salespeople urge the US government to investigate these mega MLM companies’ business practice. See how much these highly profitable companies’ share price has dropped in just a week.

Nu Skin

Herbal life

Dr Jon M. Taylor, once a Nu Skin distributor, and now arguably US’s foremost critic of the MLM business structure does not mince words. “MLMs and pyramid schemes are the same thing…People have a problem saying that, but I don’t. All of these [MLM] companies involve a pay-to-play model where participants are required to pay for their own paycheck.”

And that creates an environment that preys on the poor and the uneducated and those who need to work from their homes, ….It’s wholly unfair,” Dr Taylor says. “It’s like a fast-spreading cancer.”

It’s anyone’s guess how hard the Chinese Government will go down on Nu Skin but this is just the beginning.

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