Breaking News / Woo Files: Nu Skin Taiwan head accused of illegally importing medical devices

News from Taiwan via Malaysia, original Chinese and English translation provided. (Thanks to JusticeAlwaysLate for spreading this bit of news)

台灣．新北市18日訊）在馬來西亞、新加坡和汶萊都設有分公司的著名直銷公司美商如新華茂（NU SKIN）台灣總裁姜惠琳與多名幹部、高階直銷商，涉嫌明知產品“BODY SPA機”是未獲衛生機關核准輸入的醫療器材，仍在2012年間從香港帶1萬多套回台販售，獲利約1600多萬元台幣（下同．約210萬令吉）。新北地檢署昨依違反《藥事法》等罪嫌，起訴姜女等31人。

(Taiwan, Taipei Dec 18th) Well-known direct selling US company Nu Skin, with branches in Malaysia, Singapore, and Brunei, has its Taiwan CEO Huilin Jiang, along with several officers and high level members accused of knowing that the product "Body Spa machine" is an "not permitted as import" medical device, yet brought back over 10000 kits from Hong Kong for sale in Taiwan, profited over 16 million NTD (almost $500000 USD). Taipei Public Prosecutor's Office has now officially charged 31 people, including Ms. Jiang, with violations of "Drug Regulation Act". 

美商如新集團1984年在美國創立，以直銷方式銷售、製造美妝保養品，至今已跨足全球54個市場，1992年設立台灣分公司，2007年由姜惠琳接任台總裁，還曾贊助2013年的台北101跨年煙火。

Nu Skin is founded in the US in 1984 and operates via direct sales of cosmetics, and is now in 54 markets around the world. Taiwan branch was established in 1992, and Ms. Jiang took over as CEO in 2007. Nu Skin Taiwan was a sponsor of the 101 building New Years Fireworks and festivities 2013. 

全案起因於前年，一名林姓賣家在網路上販售號稱能緊緻肌膚的“BODY SPA機”，被檢舉未經核准，林到案供稱是向如新直銷商購買後，獲緩起訴。

The case started three years ago. A "Lin" advertised a machine online for sale called "Body Spa" that claimed to tighten muscle tone, and was investigated as the device is not legally permitted for sale without Taiwan FDA approval. Lin cooperated with investigators and said he got the machine from Nu Skin reps and had his case continued. 

不過檢調追查，發現衛生署早在2011年，就曾以未附安全證明文件等理由，禁止如新進口“臉部SPA機”，但姜惠琳仍在同年底，未申請主管機關核准，就另外核可BODY SPA機行銷策略，由如新的寰宇領袖、藍鑽級主任等高階直銷商，向下線會員推銷，稱可向海外預購BODY SPA機，然後趁集團在香港舉辦大中華區年會時領貨。

Further investigations show that the Taiwan FDA had denied Nu Skin's import of Body Spa back in 2011, due to various reasons including "no safety documents included". However, Ms. Jiang went ahead, later in 2011, and approved sales strategy of Body Spa kits by (Cosmo?) leaders, Blue Diamond level execs, and such highest level members to be promoted to lower level members, claiming that the high level execs can pre-pay for these new machines and stock them overseas, and everybody can pick up their stock when Nu Skin held their convention in Hong Kong later. 

MLM and SCAM NEWS 24-MAR-2014: WCM777 evil spawn, NuSkin Fined in China, KaratBars Warning in Canada

Three bits of scam and MLM related news...

Is Phil Ming Xu Still Involved in Global Unity Despite Tweeting He Got Out?

Phil Ming Xu, who had previously claimed he's no longer involved in WCM 777, Kingdom 777, or Global Unity (or Qianxi, or whatever name they changed to) on Twitter, may have been play word games, according to BehindMLM. A blog in Germany stated outright that Global Unity's "product line" called "Vizinova", is founded by none other than Phil Ming Xu, and has a similar investment structure: put in money, get lots of money out later.

See BehindMLM for details.

BREAKING NEWS: Herbalife may also be under investigation in China

When reports of NuSkin representative's alleged misconduct surfaced in Chinese media back in June and July 2013 in China it received little western media attention. However, when the Chinese Communist Party media People's Daily repeated the allegations, and called for local authorities to investigate and stamp out pyramid schemes and pyramid selling, western media noticed, and NuSkin stock took a dive, and Herbalife stock also took a dive because it's already under attack in the US. 

Turns out, Herbalife may be under more direct threat than people realized, as NYPost managed to find a report in August 2013 in First Financial Daily (of China) that Herbalife reps in China encouraged front-loading and thus is in violation of anti-pyramid-selling laws in China, among other potential law-breaking.  Quoting from the report... 

Recently, First Financial Daily discovered through private investigation that, while Herbalife is fast growing in the China market, its sales model is suspicious in five respects: collection of "recruitment fees" in disguised form, suspected exaggeration of  product effects, possible windfall profit derived from products, fast growing clubs absent of strict supervision and control, and product purchase overly dependent on sales representatives or potential sales representatives…… A series of issues have deviated the direct selling model of this company, and have contradicted with certain provisions in the "Regulations on the Prohibition of Pyramid Selling" promulgated and implemented by the State Council in 2005. As a result, suspicion has been brought up that Herbalife's sales model is a pyramid scheme. 

The specific offense mentioned first in the report is reps are required to buy $2000 USD worth of Herbalife products to join. They're told that 1) it's easy to sell, 2) it demonstrates that they are serious about this opportunity, and 3) there are plenty of people who want to join and only limited positions available.

There's a lot more.

BREAKING NEWS: NuSkin suspends recruitment meetings in China (until further notice)

Amidst charges by Chinese government that its agents are running a pyramid scheme, NuSkin today announced that it is suspending all recruitment meetings in China (until further notice).

NuSkin is an American MLM but operates as direct sales in China... officially. However, many local newspapers have reported, since June 2013, that many NuSkin sales teams actually operate as Multi-level Marketing, which is ILLEGAL in China, complete with pyramid organization. Many were alleged to also make fradulent health claims, and employ cult brainwashing tactics on participants.

NuSkin announced only hours ago, on 21-JAN-2014 that it will suspend all recruitment meetings in China pending further review of training, and blames a few overzealous reps of using unethical tactics to drive sales. It maintains that the reports in Chinese newspapers are exaggerated and are not typical of its presence in China.

Critics noted that it does not preclude person-to-person recruitment.

http://www.businessweek.com/news/2014-01-21/nu-skin-to-review-china-practices-after-pyramid-scheme-claims

Related articles

• MLM Dictionary: Pyramid scheme
• MLM Dictionary: Amway Safeguard Rules
• Bad Arguments: Misrepresenting Pyramid Schemes, esp. by people who should know better
• MLM Mythbusting: Does Having a real product prove business is not a pyramid scheme?

BREAKING NEWS: NuSkin in Serious Legal Trouble in China

NUSKIN logo (Photo credit: Ellery Chen)

China usually don't advertise internal troubles, except when they are about to make an example of somebody. So when NuSkin was mentioned on People's Daily, the official newspaper of the government, people really noticed. And it's NOT in a good way. 

Just reading this paragraph from Xinhua (Chinese official press agency) is enough to send NuSkin stock price in the US plummet 30%. 

BEIJING, Jan. 16 (Xinhua) -- Local authorities have been told to investigate media reports that allege Nu Skin distributes false information and conducts illegal business in China, the country's State Administration for Industry and Commerce (SAIC) said Thursday.

The "media reports" in China had been posted in June or July 2013, as had continued research from Citron Research, since 2012! [Link 1]  [Link 2]

if you wish to do your own research, what you need to know is reports are in Chinese, so you will need to search with the Chinese name: 如新

When China represents 30% of the company's revenue, and sales had SHRUNK in the rest of the world vs. China, this is going to be a MAJOR blow to NuSkin, whether the reports are 100% true or not. And there's no doubt there is *some* truth to the media reports, esp. when it came from widely different sources, in different parts of the country, and even Citron's own investigative report.

But what's REALLY disturbing is the cult-brainwashing.