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TheStreet Open House

Herbalife Investors Can Look to China for a Break from Bad News

Stocks in this article: HLFHONEMRTYEKF

BEIJING (TheStreet) -- The city of Nanjing, China, is giving Herbalife (HLF) investors good reason to stay positive despite the company's ugly dispute with hedge fund manager and investor activist Bill Ackman.

The city government Tuesday announced a deal with Herbalife paving the way for the U.S. company to build "a leading, global scale production base" at the Nanjing Jiangning High-Tech Industrial Park.

Terms were not disclosed, and Herbalife did not make an announcement. But the government's Web site said the plant will be "heavily invested" and should open in late 2015.

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The industrial park is already home to Honeywell (HON), Emerson (EMR), ThyssenKrupp (TYEKF) and other western company factories.

China is a fast-growing market for the global nutritional supplements supplier. Speaking to analysts recently, Herbalife officials said they now sell products in most of China's provinces and major cities. They've also used China to pilot a "preferred customer" program that's attracted more 200,000 members and could go global.

Herbalife currently has two China plants: One in Suzhou, which is near Shanghai and less than three hours from Nanjing, and in the southern city of Changsha. The latter is near farming areas and was called a "global raw materials" supplier for Herbalife by local government officials when company executives formally opened the plant in 2012.

Herbalife has been methodically building a China marketing network since 2005. It's also working with government health agencies on healthy lifestyle campaigns. For example, the company in July opened a public fitness education center in Shanghai. And Herbalife keeps in touch with China's urban middle class via postings on Sina Weibo.

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