Herbalife, Nu Skin To Be Affected By Tighter Regulations In China


Herbalife Ltd (NYSE:HLF) and Nu Skin Enterprises, Inc. (NYSE:NUS) both suffered when China announced it was launching an investigation into Nu Skin. Now Bloomberg is reporting that its sources claim the country’s regulators will be tightening restrictions on direct sales companies like Herbalife and Nu Skin.

China said to draft new rules for MLMs

According to the network’s sources, the State Administration for Industry & Commerce is in the process of writing new rules which would regulate training for sales teams for direct sales companies. The agency is also said to be writing rules to monitor these companies’ marketing meetings and also tighten their application procedures for when companies like Herbalife Ltd (NYSE:HLF) and Nu Skin Enterprises, Inc. (NYSE:NUS) want to enter new areas of the nation or offer new products.

The State Council in China stated in a notice which is dated earlier this month and was published today that the country should “severely” crack down on companies which are operating as pyramid schemes and be stricter about regulating their sales. Last month, Nu Skin Enterprises, Inc. (NYSE:NUS) said it would launch a review into the practices of its employees and sales teams in China. The company’s CEO has also said that they are “absolutely not” a pyramid scheme.

Herbalife, Nu Skin face pyramid scheme allegations

Meanwhile the allegations that Herbalife Ltd (NYSE:HLF) and Nu Skin Enterprises, Inc. (NYSE:NUS) are pyramid schemes continue from a variety of places. Bill Ackman continues to turn up the pressure on Herbalife as he tries to recover the money he lost on his massive short of the company. He said recently that he has made progress toward reaching the breakeven point on his short, but he isn’t there yet. Several organizations have also been pushing for U.S. regulators to investigate Herbalife as a possible pyramid scheme. Unlike China, which has focused most of its attention on Nu Skin, U.S. lawmakers and organizations have been hyper-focused on Herbalife.

However, U.S. regulators have shown no interest in either Herbalife Ltd (NYSE:HLF) or Nu Skin Enterprises, Inc. (NYSE:NUS).

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)

About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at Mjones@valuewalk.com.

1 Comment on "Herbalife, Nu Skin To Be Affected By Tighter Regulations In China"

  1. It’s a network, there are no pyramid’s to crack down on. China has to say something significant after mistakenly crashing down NUS, so generally there will be few changes. The real benefit of network marketing is knowing the seller, having the seller live close by, and being able to have support and encouragement through a process. These benefits will occur with or without increased regulation, and increased training for sellers can only be a good thing.

Leave a comment

Your email address will not be published.