Nu Skin's Growth Could Stall Under Chinese Scandal

Nu Skin Enterprises has 40,000 salespeople peddling weight-loss kits and skin cleansers in China. Sales on the mainland had been chugging along in recent years, reaching 30 percent of the Provo (Utah) company’s $2.16 billion in revenue for the first nine months of 2013. That growth is now threatened by the allegation in the People’s Daily on Jan. 15 that Nu Skin is operating a “suspected illegal pyramid scheme.” A day later, China’s State Administration for Industry and Commerce said it would launch a probe into the company’s operations. Nu Skin’s shares tumbled 38 percent in two days. “We are absolutely not a pyramid scheme,” says Chief Executive Officer M. Truman Hunt. “Nobody gets rich in our world by recruiting others and selling them on nothing but the income opportunity.”

A little-noticed company that’s grown dramatically in recent years, Nu Skin sells more than 200 products. Global revenue is split almost evenly between its nutrition and personal-care lines, according to Hunt. Its biggest seller is the LifePak dietary supplement, a collection of vitamins, antioxidants, and other ingredients packaged in single-serve pouches. In personal care, the star is the AgeLOC Body Spa, a device that uses “pulsating micro-current technology to help reduce signs of aging,” according to marketing literature.