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US skin care firm suspends recruitment over 'pyramid' probe
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American direct selling personal care company Nu Skin Enterprises said it will suspend recruiting new sales people and direct sellers in China and will carry out internal review of its Chinese operations following a government directive to investigate its business.
The State Administration for Industry & Commerce said last week that it will order local government bureaus to look into the US company's business operations in China.
"The commerce department will deal with it according to the law and regulations if the situations are proved to be true," the State Administration for Industry & Commerce said.
People's Daily last week reported that Nu Skin is suspected of operating under a "pyramid scheme" and has been organizing "brainwashing" gatherings.
After initial review, Nu Skin said some sales people failed to adequately follow and enforce its policies and regulations.
"We apologize for these unauthorized activities and fully intend to take corrective actions," it said in a stock exchange filing.
Nu Skin reiterated that it prohibits inaccurately attributing endorsement to public figures or media reports and exaggerating product claims.
China's sales accounted for nearly one-third of the US company's US$2.16 billion revenue in the first nine months in 2013, according to its earnings release earlier this month.
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