Nu Skin sees Chinese potential

Mainland Chinese consumers are increasingly joining the health and
beauty craze which is gripping the west and as such have helped US
personal care group Nu Skin Enterprises to a 400 per cent increase
in revenues there during the second quarter of 2004.

The phenomenal growth in China contributed significantly towards Nu Skin's aggregate revenue improvement of 19 per cent to $548.2 million. Net income improved by 19 per cent to $34.8 million.

The growth is driven by a simple need: people all over the world want to look and feel good for as long as possible. The increase in income levels in densely populated regions like China has therefore led to a rise in the consumption of health and beauty products.

Armed with a wide range of cosmetics, nutritional supplements, skin and hair care products trading under the name Nu Skin, the group has established a business network spread across eight Chinese provinces and 23 cities, and revenues from these operations rose by 97 per cent to $59.2 million during the quarter, helped by a 400 per cent gain from Mainland China.

Sales in Hong Kong and Taiwan were also up, rising 71 per cent and 4 per cent respectively.

Given the massive population of China, these figures show that Nu Skin is still scratching the surface there, but with further investments planned - helped by a cash pile of $169.8 million - the company has clear plans to conquer the Chinese market in the long term.

But competition there is bound to increase with time as other multinationals such as Constance Carroll, Procter and Gamble and L'Orëal have set their sights on the Chinese market.

Nu Skin chief executive Truman Hunt said the group would be able to further raise its profile in China in the rest of the year thanks to new direct sales regulations which recently came into force there.

The company is also planning a market entry for its subsidiary Pharmanex, which specialises in dietary and botanical supplements, scheduled for sometime next year.

As a result, Greater China revenue is expected to hit $120 million at the end of the year and $180 million in 2005.

Nu Skin generates the largest chunk of its revenue from the North Asian region, which includes Japan and South Korea. The region's revenue grew by 6 per cent to $159 million in the quarter.

North America delivered 9 per cent revenue growth to $36 million while the South Asia Pacific region saw sales rise 13 per cent to $20.4 million.

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