mainland china opportunity training “be the difference” global convention 2002
TRANSCRIPT
Mainland China Opportunity Training
“Be the Difference”
Global Convention 2002
Overview of Mainland China Market
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
Other Area 95%
Phase II 5%
Guandong 35%Jiangsu 26%
Shanghai 1%Zhejiang 19%
Fujian 12%
Mainland China DemographicsLand Mass
9,600,000 sq km
Guandong 34%
Jiangsu 29%
Shanghai 6%
Zhejiang 18%
Fujian 13%
Mainland China DemographicsPopulation
1.3 billion people Other Area 80%
Phase II 20%
Guandong 34%
Jiangsu 22%Shanghai 14%
Zhejiang 19%Fujian 11%
Mainland China DemographicsRetail Sales
2.86 Trillion Rmb
Phase II 42%
Other Area 58%
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Guangdong Fujian Zhejiang Shanghai J iangsu
Mainland China DemographicsAnnual Urban per Capita Income
9,762 Rmb
(US $1,180)
7,432 Rmb
(US $910)
9,279 Rmb
(US $1,130)
11,718 Rmb
(US $1,430)
6,800 Rmb
(US $830)
Guangzhou1 Flagship Store30 TE Stores
Shenzhen5 TE Stores
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
Shantou4 TE Stores
Foshan2 TE Stores
Nanhai2 TE Stores
Fujian Province
Fuzhou1 Flagship Store5 TE StoresXiamen
3 TE Stores
• Favorable economic policies
• Leading province for Twn, HK, and Macao compatriots
• Population: 31.83 million
•Land Area: 120,000 sq km
Quanzhou2 TE Stores
Zhejiang Province
Hangzhou1 Flagship Store5 TE Stores
• “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
Ningbo1 TE Store
Jiangsu Province
Nanjing1 Flagship Store5 TE Stores
Wuxi5 TE Stores
• Second strongest economy in China
• Population: 70.21 million
• Land Area: 100,000 sq km
Suzhou2 TE Stores
Shanghai
Shanghai1 Flagship Store30 TE Stores
• 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
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.
Mainland China Market Projections
Summary of Mainland China Development
Timeline
1990 Beginning of DS Industry
1996 DS Ind.
Est. $100 million
1998 Government imposed ban
2001 voted into WTO
2004 WTO Entry(New DS Regulations)2000 Nu Skin
Phase I
2003 Nu Skin Phase II
2002 DS Ind. Est. $1 billion
2005 DS Ind.
Est. $5 Billion
History of Direct Selling 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
Nu Skin’s History in China
Shanghai Manufacturing Facility
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
Mainland China Business Model
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
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:
Retail Store Layout
Guangzhou TE Store
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
Sales Representative Application
• Referring ID number• Contact information of
potential Sales Rep• Date of birth• Personal ID #• Degree of education
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
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
Mainland China Commissions and Compensation Plan
• 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
Nu Skin Executive Responsibilities within Mainland China
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
The China Phase II marketing plan is a store based retail model and is different than our global seamless marketing plan.
Mainland China Terminology
Similar to
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• 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
Mainland China Sales Plan
Customer
• Purchases at full retail price
• Not linked to Sales Representative
– Sales Representative is responsible for providing ID number to receive credit for purchase
Preferred Customer
Minimum 500 Rmb retail purchase Future purchases at 10% discount Linked to Sales Representative or executive
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
Qualifying Sales Representative
Month 1 Month 2 Month 3400 GSV 700 GSV 1,000 GSV
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
Sales Representative
Permanent employee of Shanghai Nu Skin Purchase at 15% discount Work up to 20 hours per week at retail store Same compensation as QSR, plus 5-15% Retail Sales Bonus
on GSV
GSV* Commission700 GSV 5%800 GSV 6%
1,000 GSV 7%1,200 GSV 8%1,400 GSV 9%1,700 GSV 10%2,000 GSV 11%2,300 GSV 12%2,600 GSV 13%3,000 GSV 14%
4,000+ GSV 15%
Sales Representative
If minimum GSV benchmarks are not met, employee may be terminated at company’s discretion.
S.R.
C
P.C.
C
C
P.C.
CP.C.
Team Sales Manager
Meet Sales Representative qualifications Additional 1,000 G1 GSV Receive 2.5% or 5.0 % of G1 GSV
Team Sales Manager
GSV Commission*700 GSV 2.5%
1,000+ GSV 5%
*paid on personally trained SR and TSM GSV.
TSMC
P.C.
C
S.R.
S.R.
P.C.P.C.
C
C
C
C
Manager Training Bonus
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
Senior Sales Manager
GSV Commission**700 GSV 2.5%
1,000 GSV 5%
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
SSM
PC
P.C.
C
TSM
S.R.
S.R.
P.C.
C
C
C C
C
P.C.
C
C
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
Products
Nu Skin Premium ProductsFace Care Retail Price* (Rmb) Price (US$) Point Value
Creamy Cleansing Lotion 150 $18.30 11.0Pure Cleansing Gel 150 $18.30 11.0Exfoliant Scrub 150 $18.30 11.0pH Balance Hydrating 120 $14.60 9.0pH Balance Mattefying 120 $14.60 9.0Celltrex Ultra Recovery Fluid 400 $48.80 30.0Moisture Restore Day Lotion n/d 320 $39.00 24.0Moisture Restore Day Lotion c/o 320 $39.00 24.0NaPCA Moisturizer 300 $36.60 22.0Enhancer Skin Conditioning Gel 120 $14.60 9.0Night Supply Lotion c/o 375 $45.70 28.0Night Supply Cream n/d 375 $45.70 28.0Rejuvenating Cream 350 $42.70 26.0NaPCA Moisture Mist 115 $14.00 8.5
*Retail price is VAT inclusive
Nu Skin Premium ProductsBody Care Retail Price* (Rmb) Price (US$) Point Value
Body Bar 125 $15.20 9.25ABC Gel 100 $12.20 7.5Body Smoother 155 $18.90 11.5Hand Lotion 115 $14.00 8.5Liquid Body Lufra 130 $15.90 9.5
TreatmentFace Lift - Sensitive 430 $52.40 32.0NSW Skin Lotion 315 $38.40 23.5NSW Skin Essence 470 $57.30 35.0NSW Milk Lotion 350 $42.70 26.0NSW Cream 400 $48.80 30.0
*Retail price is VAT inclusive
Face Care Price Comparison
0
100
200
300
400
500
600
700
Nu Skin
Rtl A
Rtl B
Rtl C
DS A
DS B
DS C
Treatment Price Comparison
0
100
200
300
400
500
600
700
800
White Skin Lotion White Essence White Milk Lotion White Cream
Nu Skin
Rtl A
Rtl B
Rtl C
DS A
DS B
DS C
Body Care Price Comparison
0
50
100
150
200
250
300
350
400
450
Body Bar ABC Gel Body Smoother Hand Lotion Body Lufra
Nu Skin
Rtl A
Rtl B
Rtl C
DS A
DS B
DS C
Locally Branded Products
Locally Branded Product Price List
Scion Retail Price* (Rmb) Price US$ Point ValueFacial Cleansing Gel 60 $7.30 4.5Refining Facial Toner 60 $7.30 4.5Polishing Cream 65 $7.90 4.8Moisture Light Cream 70 $8.50 5.2Moisture Rich Cream 80 $9.75 6.0Hydrating Peel-Off Masque 70 $8.50 5.2Deep Cleansing Clay Masque 70 $8.50 5.2Eye Gel 90 $11.00 6.7Pure Shampoo 35 $4.30 2.6Pure Conditioner 35 $4.30 2.6Scalp & Hair Treatment 30 $3.65 2.2Two-in-One Shampoo & Conditioner 35 $4.30 2.6Styling Gel 38 $4.60 2.8Hand & Body Moisture Lotion 50 $6.10 3.7Moisturizing Hand & Body Wash 35 $4.30 2.6
*Retail price is VAT inclusive
SP Pure for teen age skin Retail Price* (Rmb) Price US$ Point ValueCleansing Lotion 35 $4.25 2.6Refreshing Tonic 35 $4.25 2.6Facial Moisturizer 40 $4.90 3.0Facial Mask 40 $4.90 3.0
Everyday Toothpaste 135g 30 $3.65 2.2
Clean LandFeminine Wash 32 $3.90 2.4
Locally Branded Product Price List
*Retail price is VAT inclusive
Her Shades Retail Price *(Rmb) Price US$ Point ValueFoundation 100 $12.20 7.5Lipstick 75 $9.15 5.6Eye shadow 90 $11.00 6.7Blush 90 $11.00 6.7Lip Liner 40 $4.90 3.0Wet/Dry Powder 130 $15.85 9.7Finishing Powder 100 $12.20 7.5Waterproof Mascara 65 $7.90 4.8
Limited Time OffersTwinkling Lip Gloss 60 $7.30 4.5Beautyberry Lip Balm 25 $3.05 1.8
Locally Branded Product Price List
*Retail price is VAT inclusive
Policies and Procedures
Travel to Mainland China
• Only China trained Executives
• All business* travel must be registered
• Business travel limited to 15 days per quarter
*Business travel equates to meetings with more than 5 people
Travel Approval Form
• Name• Distributor ID• Date of travel• Location of travel• Duration of visit• Purpose of trip• Type of training
performed
Training Meetings
• Notification– Must notify Nu Skin 15 days in advance
• Location– only at company facilities or approved rented hotel meeting
rooms
• Duration– Meetings can last no longer than 3 hours
– No more than 1 meeting per day
Training Meetings
• Fees– No fees can be collected for meeting attendance
• Content– Meetings should be related to:
• Product Training
• Sales Training
• Customer Service
• Company Policies
Training Request Form
• Name• Distributor ID• Location of training• Date and time of
training• Number of attendees• Meeting agenda
Do:• Provide Critical training on
– Business model review– Local product training
Training Rules
Do Not:
• Promote get rich scenarios
• Discuss future finances and retirement
• Talk negative about government enterprises
• Talk about distributor groups
Additional Communication by China Business Center
China Business Center
• Latest information• Training material• View China compensation plan
China Business Center Phase II
Available November 2002
• Preferred Customer Referral Forms• Sales Representative Applications• Travel Approval Forms• Training Request Forms• Store Locator
Training Materials
• Copy of this presentation
• Compensation Plan Brochure
• Compensation Plan training material
• Draft Shanghai Nu Skin Product Catalog
• List of completed stores
• Video CD
China Opportunity Training
“Be the Difference”
Global Convention 2002