This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Nu Skin Enterprises Investigated By China After Newspaper Probe

Stocks in this article: NUS

Investors are responding to news about Chinese officials deciding to investigate Nu Skin Enterprises as a possible pyramid scheme.

Nu Skin Enterprises, Inc. (NUS) shares are getting killed in trading for a second consecutive day. On Wednesday, the issue was a report in the Chinese newspaper People’s Daily. Today, it’s the news that the Chinese government is taking that report seriously and has launched an investigation.

Shares of Nu Skin declined as much as 22% today, but its stock wasn’t the only one affected. Shares of competing multi-level marketing companies Herbalife Ltd (HLF) and USANA Health Sciences, Inc. (USNA) also declined. Herbalife fell as much as 7% on the news, while USANA declined as much as 9% in midday trading.

China matters to Nu Skin, Herbalife

The reason Nu Skin Enterprises, Inc. (NUS) shares have fallen so far is because of how important the MLM company has said China is to its business model. Herbalife is in the same boat, as expansion into China has also been one of the company’s goals. Now according to Bloomberg, Chinese officials are launching an investigation into Nu Skin’s operations. Investors could be wondering whether other MLMs will also be investigated by them.

A statement posted on the State Administration for Industry and Commerce’s website said it is taking the allegations made by the People’s Daily serious and has requested that Nu Skin be investigated immediately. Officials said if the allegations turn out to be true, they “will deal with it according to the law and regulations.”

What might be wrong with Nu Skin’s business model

The report in the People’s Daily accused Nu Skin Enterprises, Inc. (NUS) of brainwashing people into becoming distributors. The report also said that the company sells 104 products in China, which is 20 more than what China actually allows. Nu Skin claims that the article “contains inaccuracies and exaggerations” which do not represent its business in the country.

Nu Skin has a license for direct sales, according to the Chinese newspaper. In 2012, 20% of the company’s sales were from Hong Kong and China. As of July 2013, the company held the licenses required to run its direct sales network in 19 of China’s 32 different municipalities and provinces.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs