Nu Skin Enterprises on Direct Selling in China (NUS 3Q05 Conf Call Quotes)

Nu Skin Enterprises (ticker: NUS) President and CEO Truman Hunt had the following to say about direct selling in China during management's Q3 2005 earnings results conference call:

In Mainland China in particular, we faced some challenging business dynamics this quarter. First, the compensation plan changes we made on July 1 in order to lay the ground work for the long term had an obvious negative impact on short-term activity.

…..following the publication of direct selling regulations in September, there remains a level of uncertainty in the marketplace.

….there is still some debate about what the new regulations do and do not enable. But most agree that the new regulations will enable single-level compensation paid to independent contractors working either full time or part time who will be allowed sell away from fixed retail locations.

….as a result of the new regulatory framework, we plan to pursue a dual business model in China. We will apply for a direct selling license and employ a single-level compensation system for our independent contractor sales representatives and for those who are interested in generating higher levels of income, we will continue with our current employed sales force business model. I think you'll see other direct sellers following a similar approach and I believe we will enjoy an operational advantage over others because we've been doing this for the past three years.

(Quotes are from the CCBN StreetEvents transcript.)

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