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case study CONCLUSION Nu Skin's long-term success in China-traditionally a tough market for direct selling-remains to be determined. It is clear that even allegations of

case study
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CONCLUSION Nu Skin's long-term success in China-traditionally a tough market for direct selling-remains to be determined. It is clear that even allegations of wrongdoing can significantly impact share prices and growth opportunities. In fact, the allegations of Nu Skin had an almost immediate impact on the stock of other foreign direct sellers operating in China. A day after the allegations, Herbalife shares had fallen 10 percent, while shares of USANA Health Sciences fell 12 percent. Nu Skin must ensure that Chinese employees are complying with its guidelines on direct selling. This requires a renewed emphasis on monitoring and training its Chinese independent contractors. Shortly after these allegations came to light, Nu Skin indefinitely suspended recruitment meetings in China and said they were modifying its training to better educate independent contractors in best practices. On the other hand, supporters of Nu Skin believe that Nu Skin is being targeted because it is a foreign brand. The founder of Shanghai-based China Market Research Group has clearly stated that it is becoming more and more common for China to target foreign brands, and the climate is the worst he has seen in 15 years. This could lend weight to the allegation that the People's Daily unfairly targeted Nu Skin because it is a foreign brand. Because direct selling is still viewed as a questionable practice by many in China, the fact that Nu Skin is a direct selling firm may place it at an additional disadvantage. Nu Skin has successfully faced down past challenges that threatened to damage the firm. In recent years the firm has become a major force in the global direct selling world with strong opportunities for growth. While this growth might be hindered by allegations such as these, successfully navigating through ethical issues will help Nu Skin get back on track. Much of its potential growth depends on how it will address future challenges. QUESTIONS 1. How does a pyramid scheme differ from multilevel marketing? 2. Describe the accusations against Nu Skin in China and why they are so significant 3. What should Nu Skin do to guard against questionable selling practices in the future

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