Herbalife Looks to Expand in China After Licensing Agreement

Herbalife Looks to Expand in China After Licensing Agreement

Herbalife Ltd. (NYSE:HLF), the controversial multi-level marketing (MLM) nutritional supplement company, is set to expand its business operations in China after receiving the approval of additional direct selling licenses from the Ministry of Commerce in the country.

Herbalife Looks to Expand in China After Licensing Agreement

Herbalife Ltd. (NYSE:HLF) China plans

According to Herbalife Ltd. (NYSE:HLF), the Chinese Ministry of Commerce issued a direct selling license for the company in the province of Yunnan, which covers 12 cities including its capital Kunming. The license allows the company to start conducting  business in the province immediately.

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In March of 2007, Herbalife Ltd (NYSE:HLF) received its first direct selling license from the Ministry of Commerce. According to the company, its latest license for the province of Yunnan is the 25th. The company is doing businesses in the provinces of Shanghai, Jiangsu, Hubei, Anhui, Shandong, Henan, Zhejiang, Sichuan, Chongqing, Fujian, Hunan, Guangdong, Jiangxi, Hainan, Guizhou, Guangxi, Liaoning, Jilin, Heilongjiang, Shaanxi, Beijing, Shanxi, Tianjin, and Hebei.

The business operations of Herbalife Ltd (NYSE:HLF) and other multi level marketing companies such as NU Skin Enterprises, Inc (NYSE:NUS) and USANA Health Sciences, Inc (NYSE:USNA) are growing in Asia, according to D.A. Davidson & Co. The analyst noted that Asia is the main driver for Herbalife’s outperformance in earnings. In one of its multi-city Asian extravaganza, the company enjoyed a 22% increase in participants to 55,000 this year.

Herbalife Ltd. (NYSE:HLF) controversy

The latest controversy surrounding Herbalife Ltd (NYSE:HLF) is the complaint of activist investor, Bill Ackman that one of the portfolio managers of George Soros violated insider trading regulations related to its huge long position in the nutritional supplement company.

Soros’ acquisition of 5% stake in Herbalife Ltd. (NYSE:HLF) sent the stock higher by 10%, and the stock continues to surge. As of this writing, the shares of Herbalife are up by more than 1% to $66.10 a share.

Former SEC chairman, Harvey Pitt opined that Ackman’s insider trading allegation against Soros’s firm is weak and described it as a “desperation move.” Robert Chapman of Chapman Capital commented that Ackman’s complaint against Soros is preposterous and ultimate hypocrisy.

Barclays analysts, Brian Wang and Meredith Adler previously noted that Herbalife Ltd. (NYSE:HLF) remained fundamentally strong despite the controversies. According to them, the company managed to resolve some of the concerns of investors by hiring PricewaterCoopers as new auditor.

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