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Mainland China Opportunity Training

Mainland China Opportunity Training. “Be the Difference” Global Convention 2002. Overview of Mainland China Market. Mainland China Demographics. 3 rd largest country by land mass 9.6 million kilometers 2 1.3 billion people 30 provinces. Avg. GDP per capita 6,300 Rmb (US $770.00)

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Mainland China Opportunity Training

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  1. Mainland China Opportunity Training “Be the Difference” Global Convention 2002

  2. Overview of Mainland China Market

  3. Mainland China Demographics • 3rd largest country by land mass • 9.6 million kilometers2 • 1.3 billion people • 30 provinces • Avg. GDP per capita 6,300 Rmb (US $770.00) • Sixth largest economy in the world

  4. Mainland China DemographicsLand Mass Jiangsu 26% Guandong 35% 9,600,000 sq km Other Area 95% Phase II 5% Fujian 12% Zhejiang 19% Shanghai 1%

  5. Mainland China DemographicsPopulation Fujian 13% Zhejiang 18% 1.3 billion people Other Area 80% Phase II 20% Guandong 34% Shanghai 6% Jiangsu 29%

  6. Mainland China DemographicsRetail Sales Shanghai 14% Jiangsu 22% Other Area 58% 2.86 Trillion Rmb Phase II 42% Guandong 34% Zhejiang 19% Fujian 11%

  7. Mainland China DemographicsAnnual Urban per Capita Income 11,718 Rmb (US $1,430) 9,762 Rmb (US $1,180) 9,279 Rmb (US $1,130) 7,432 Rmb (US $910) 6,800 Rmb (US $830)

  8. Guandong Province • Largest consumer market in China • Developed retail sector • Ranks #1 in foreign investment • Population: 67.89 million people • Land Area: 179,000 sq km Shantou 4 TE Stores Foshan 2 TE Stores Guangzhou 1 Flagship Store 30 TE Stores Shenzhen 5 TE Stores Nanhai 2 TE Stores

  9. Fujian Province • Favorable economic policies • Leading province for Twn, HK, and Macao compatriots • Population: 31.83 million • Land Area: 120,000 sq km Fuzhou 1 Flagship Store 5 TE Stores Xiamen 3 TE Stores Quanzhou 2 TE Stores

  10. Zhejiang Province • “Land of silk and Tea” • Strongest non-state owned economy • Retail sales jumped 10.7% in 2001 • Population: 43.64 million • Land Area: 100,000 sq km Hangzhou 1 Flagship Store 5 TE Stores Ningbo 1 TE Store

  11. Jiangsu Province • Second strongest economy in China • Population: 70.21 million • Land Area: 100,000 sq km Suzhou 2 TE Stores Nanjing 1 Flagship Store 5 TE Stores Wuxi 5 TE Stores

  12. Shanghai • Pearl of the Orient • China’s center of economy, finance, and trade • Excellent infrastructure • High income and purchasing power • Population: 14 million • Land Area: 6,340 sq km Shanghai 1 Flagship Store 30 TE Stores

  13. Mainland China Market Projections Direct Selling: Analysts predict China’s direct selling market will be between $5 billion and $7 billion by 2005 making it the third largest direct selling market in the world. Cosmetic and Toiletries: By 2005 it is estimated that the China cosmetic and toiletry market will reach $8.9 billion in sales.

  14. Summary of Mainland China Development

  15. History of Direct Selling in China 2004 WTO Entry (New DS Regulations) 2000 Nu Skin Phase I 1996 DS Ind. Est. $100 million 2002 DS Ind. Est. $1 billion Timeline 1990 Beginning of DS Industry 2005 DS Ind. Est. $5 Billion 2001 voted into WTO 1998 Government imposed ban 2003 Nu Skin Phase II

  16. Nu Skin’s History in China 1993 - Investigative trips to China 1993-1997 - Expansion throughout Asia and the World 1998 - PHASE I - Began investment in China - Acquired Pharmanex assets - Development stalled due to Government imposed ban 1999 - Revised strategic plan based on Government regulations 2000 - Acquired retail stores 2001 - Nu Skin manufacturing plant completed 2002 - Aggressive expansion plans announced* 2003 - PHASE II - Retail store model with TE and Executive participation * Total investment through 2002 is US $80 million

  17. Shanghai Manufacturing Facility

  18. Force for Good Construction of Primary School in Chun An County • Provided funds for construction of school • Donate textbooks and study materials • To be finished in September, 2002

  19. Mainland China Business Model

  20. How to participate in Mainland China • Maintain executive level outside of China • Attend China specific training* • Take and pass test on China rules and regulations *Consult with your local office for regional training on China

  21. Retail Sales Model • All sales must occur at a Nu Skin retail store • Sales must occur from an employed sales force China laws and regulations require:

  22. Retail Store Layout

  23. Guangzhou TE Store

  24. Who can be referred as a Sales Representative? • Resident of the People’s Republic of China • Over 22 years of age • No students • No full-time military service • No government employees • Must first be a Preferred Customer

  25. Sales Representative Application • Referring ID number • Contact information of potential Sales Rep • Date of birth • Personal ID # • Degree of education

  26. Where to refer Sales Representatives? • Flagship Stores • Team Elite Stores Sales Representative Applications can be found at: • each retail store • through the Chinese Business Center on the internet

  27. SR Hiring Procedure • First become a Preferred Customer • Recommended by China Registered Executive or local preferred customer or sales representative. • Shanghai Nu Skin plans to begin receiving application on or about January 9th • Interview with Branch Office • Qualifications: • received sales training • desire to learn about personal care products • Willingness to be employed

  28. Mainland China Commissions and Compensation Plan

  29. Nu Skin Executive Responsibilities within Mainland China • Attract customers • Attract preferred customers • Encourage preferred customer to apply to become a sales representative • Product and sales training All sales representatives and retail store employees are employed by Nu Skin

  30. Mainland China Terminology China Title Nu Skin Enterprises Title Customer Customer Preferred Customer (PC) Distributor Sales Representative (SR) Executive Team Sales Manager (TSM) Gold Executive Senior Sales Manager (SSM) Lapis Executive Fixed Retail Location Walk-in Center Sales Bonus Commission Similar to Similar to Similar to Similar to Similar to Similar to The China Phase II marketing plan is a store based retail model and is different than our global seamless marketing plan.

  31. Mainland China Sales Plan • No independent distributors • All sales must occur at fixed retail locations through employee sales representatives • All product and sales training meetings must be registered with Nu Skin • Training is only for employee sales representatives and potential employee sales representatives

  32. Customer • Purchases at full retail price • Not linked to Sales Representative • Sales Representative is responsible for providing ID number to receive credit for purchase

  33. Preferred Customer • Minimum 500 Rmb retail purchase • Future purchases at 10% discount • Linked to Sales Representative or executive

  34. Preferred Customer Referral Form • Referring ID number • Contact information • Personal ID number • SR name and ID # • TSM name and ID # Preferred Customer card included in form

  35. Qualifying Sales Representative • First become a preferred Customer • Submit Sales Representative application form • Obtain the following monthly volumes: • Purchase at 10% discount • Work up to 20 hours per week as temporary employee • 250 Rmb base pay plus up to 10% Service Bonus

  36. Sales Representative • Permanent employee of Shanghai Nu Skin • Purchase at 15% discount • Work up to 20hours per week at retail store • Same compensation as QSR, plus 5-15% Retail Sales Bonus on GSV

  37. Sales Representative If minimum GSV benchmarks are not met, employee may be terminated at company’s discretion.

  38. Team Sales Manager • Meet Sales Representative qualifications • Additional 1,000 G1 GSV • Receive 2.5% or 5.0 % of G1 GSV

  39. Team Sales Manager Manager Training Bonus *paid on personally trained SR and TSM GSV.

  40. Senior Sales Manager • Meet Sales Representative qualifications • Additional 2,000 G1 GSV • Receive 2.5% or 5.0 % on G1 GSV • Receive 2.5% or 5% on G2 GSV

  41. Senior Sales Manager Senior Manager Training Bonus **paid on personally trained SR, TSM, and SSM GSV as well as Team Sales Manager’s personally trained SR and TSM

  42. International Volume Flow • Register for China activity - attend China specific training - pass examination • Purchase at 15% discount • Registered travel 15 days per quarter • Refer preferred Customers and Sales Representatives • Maintain pin title and volumes outside of China • Receive Executive Bonus and Breakaway Bonus on China activity

  43. Products

  44. Nu Skin Premium Products Face Care Retail Price* (Rmb) Price (US$) Point Value Creamy Cleansing Lotion 150 $18.30 11.0 Pure Cleansing Gel 150 $18.30 11.0 Exfoliant Scrub 150 $18.30 11.0 pH Balance Hydrating 120 $14.60 9.0 pH Balance Mattefying 120 $14.60 9.0 Celltrex Ultra Recovery Fluid 400 $48.80 30.0 Moisture Restore Day Lotion n/d 320 $39.00 24.0 Moisture Restore Day Lotion c/o 320 $39.00 24.0 NaPCA Moisturizer 300 $36.60 22.0 Enhancer Skin Conditioning Gel 120 $14.60 9.0 Night Supply Lotion c/o 375 $45.70 28.0 Night Supply Cream n/d 375 $45.70 28.0 Rejuvenating Cream 350 $42.70 26.0 NaPCA Moisture Mist 115 $14.00 8.5 *Retail price is VAT inclusive

  45. Nu Skin Premium Products Body Care Retail Price* (Rmb) Price (US$) Point Value Body Bar 125 $15.20 9.25 ABC Gel 100 $12.20 7.5 Body Smoother 155 $18.90 11.5 Hand Lotion 115 $14.00 8.5 Liquid Body Lufra 130 $15.90 9.5 Treatment Face Lift - Sensitive 430 $52.40 32.0 NSW Skin Lotion 315 $38.40 23.5 NSW Skin Essence 470 $57.30 35.0 NSW Milk Lotion 350 $42.70 26.0 NSW Cream 400 $48.80 30.0 *Retail price is VAT inclusive

  46. Face Care Price Comparison

  47. Treatment Price Comparison

  48. Body Care Price Comparison

  49. Locally Branded Products

  50. Locally Branded Product Price List Scion Retail Price* (Rmb) Price US$ Point Value Facial Cleansing Gel 60 $7.30 4.5 Refining Facial Toner 60 $7.30 4.5 Polishing Cream 65 $7.90 4.8 Moisture Light Cream 70 $8.50 5.2 Moisture Rich Cream 80 $9.75 6.0 Hydrating Peel-Off Masque 70 $8.50 5.2 Deep Cleansing Clay Masque 70 $8.50 5.2 Eye Gel 90 $11.00 6.7 Pure Shampoo 35 $4.30 2.6 Pure Conditioner 35 $4.30 2.6 Scalp & Hair Treatment 30 $3.65 2.2 Two-in-One Shampoo & Conditioner 35 $4.30 2.6 Styling Gel 38 $4.60 2.8 Hand & Body Moisture Lotion 50 $6.10 3.7 Moisturizing Hand & Body Wash 35 $4.30 2.6 *Retail price is VAT inclusive

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