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US cosmetics firm Nu Skin is planning to recruit an army of up to 5,000 direct sellers in Shanghai by the end of this year.

 

Expansion plans also include opening 100 service centers in the city and 40 more specialty shops across the country, taking the total to 180.

 

"Our strategy features a dual focus we give priority to specialty shops with their full-time contracted employees on the one hand, and service centers with their part-time direct selling staff on the other," said Qiu Jinyun, president of Nu Skin China, at a press conference in Shanghai yesterday.

 

The world's leading direct seller of personal care and nutrition products, Nu Skin was granted a direct sales licence by the Ministry of Commerce on Monday, five months after rival Avon secured the first of the licences in the country.

 

"This direct sales licence shows government recognition of our leading position in the business line. Abiding by the laws and regulations also helped us gain the government's trust," said Qiu.

 

"Despite having the direct sales licence, we still face unprecedented competition from our peers," added Qu.

 

Apart from Nu Skin, the commerce ministry also granted licences to three other companies selling nutritional supplements domestic companies Ant Power and Zhen-ao, and Hong Kong-invested Pro-Health Care.

 

In contrast to cosmetics giant Avon, Qiu said, Nu Skin is following a cautious growth strategy in China.

 

The measured development model is more suitable for conditions in China, as the direct-selling tactic has yet to be proven in the country, he said.

 

Last year was a tough one for Avon in China, the Nu Skin president believes, with its evolution from a retail model to direct selling hampered by its 7,000 franchised stores across the country.

 

"We have no such problems; we have no franchised shops and all the 140 stores are specialty shops directly under Nu Skin," said Li Chaodong, president of Nu Skin in Northern China.

 

According to the company, Nu Skin will tackle its direct selling expansion in China in a series of steps.

 

Having established their presence in Shanghai, after three months they hope to expand to Jiangsu, Zhejiang, Fujian and Guangdong provinces in southeastern China.

 

The final stage, yet to be timetabled, is full national coverage.

 

In response to the direct sales regulations issued by the State Council in 2005, Nu Skin has established a strict supervision system for its direct selling staff and only certified sellers will be allowed to market Nu Skin products outside of the specialty shops, said Qiu.

 

A website publicizing basic information including prices and new products and a 24-hour hotline will also help ensure things run smoothly, he added.

 

(China Daily August 4, 2006)