Run Your Business with Honesty and Sincerity, Effort Pays

Mary joined NU SKIN recently. She has only attended one educational training course held by her upline, but she is anxious to achieve the success of Becoming, Creating and Duplicating Stars in a short period of time. Without a thorough understanding in NU SKIN’s Sales Compensation Plan,  Policies and Procedures and relevant laws and regulations, Mary has planned a “shortcut” for herself to achieve high pin title in no time and “get rich quick”. Owing to Mary’s popularity and possession of a great social network with many friends and relatives, she invited them to join NU SKIN in groups to become her downlines.  Some of them even provided only their own identity documents to Mary for her to sign-up on behalf of them.  However, those relatives and friends have no idea about NU SKIN, its business, products and culture, and don’t understand the rights and obligations they will have after joining NU SKIN. Mary began to use these downlines’ accounts for the following actions:

1. Arranging the downline organization deliberately and manipulating the structure of downline organization by arranging the newly signed up distributors under the sponsorship of a specific downline distributor without considering whether there is any sponsorship relationship between the new distributor and the sponsor;

2. Manipulating NU SKIN’s Sales Compensation Plan, artificially controlling sales volume in order to obtain a higher pin title quickly;

3. Using downlines' distributor accounts to conduct bulk purchases in order to obtain a higher pin title and greater reward quickly. However, because of inability to sell the products in time, many products are stocked up at home, and thus unauthorized channels through internet are used again to sell those products.
Since Mary has built up a large downline organization and sales volume within a short period, Mary achieved a higher pin title and had received a plentiful reward within a few months. Mary thought that she was really smart to have figured out such a shortcut to reach higher pin title and get rich. However, she did not realize that she has already violated NU SKIN’s Policies and Procedures, and CAP 617 Pyramid Schemes Prohibition Ordinance of the law of Hong Kong.

(Analysis)

1. NU SKIN distributors are a family. In the operation of the NU SKIN business, we should sponsor downlines properly to develop a solid foundation of the upline-downline relationship. Strategically manipulating the structure of organization is an inappropriate business operating practice and will be regarded as a manipulation of NU SKIN Sales Compensation Plan, and a violation of NU SKIN’s Policies and Procedures. In the above said case, most of Mary’s business partners don’t know each other.  Some of them even simply provided their identification documents to Mary and let her sign up on behalf of them. Such manipulation  in order to expand her downline organization to reach a higher pin title and to earn bonuses through recruiting, has not only violated NU SKIN’s Policies and Procedures, but also turned the nature of direct selling business into pyramid schemes, whereby distributors earn commission mainly by recruiting. This is prohibited by the Hong Kong and Macau laws, as well as NU SKIN’s Policies and Procedures.

2. NU SKIN business requires distributors’ own endeavors in sponsoring, retailing and servicing in order to meet the requirements of sales volume and recognition. The bonus, recognition and pin title are given to distributors because of distributors’ development of NU SKIN business with integrity, i.e. “no pain, no gain”. Manipulating the Sales Compensation Plan and sales volume in order to achieve a higher pin level quickly not only violates the principle of  fairness and integrity, but also violates NU SKIN’s Policies and Procedures. Only operating NU SKIN business in a down-to-earth way can a NU SKIN business be developed steadily, and only then will the bonuses, recognition and pin titles earned by the distributors be  well deserved.

3. The great difference between NU SKIN business and traditional industries is that distributors are not required to meet any specific inventory requirement. NU SKIN hopes that distributors can order products from the company according to their sales so that capital will not be tied down and over stocking expired products or products with poor quality may be avoided. In this case, in order to reach a higher pin level and have a greater reward, Mary made use of her downlines’ accounts to make bulk purchases and over stock and has already violated NU SKIN Policies and Procedures. NU SKIN’s Policies and Procedures requires that distributors must use their own judgment in determining inventory needs based upon reasonably projected retail sales and personal use. Distributors are prohibited from ordering more than a reasonable amount of inventory. By placing an order, distributors certify that they have sold or consumed at least 80 percent of their total inventory from previous orders in order to avoid over stocking. Moreover, though internet is an efficient platform to let more people know about NU SKIN, you should use it in compliance with the law and regulations. Not only is retailing NU SKIN products through the internet not a sustainable way to operate NU SKIN business, consumers may also use the products improperly  due to misunderstanding the product instructions. This may result in consumer disputes, or even damage to our company's reputation. Distributors who resell the products through internet or other unauthorized channels will seriously disrupt the fair market order.

NU SKIN business is a people-oriented business. Introducing NU SKIN’s business, company’s culture and promoting products to customers face to face is the proper way to run the business. We would like to tell all NU SKIN distributors, that it may not be smooth in developing NU SKIN business. Sometimes, you did not succeed just because you are not on the right track yet. Shortcuts may lead to quick success, but it’s short and unsustainable. Only continuous persistence on the right track will lead you to real success.

*Please refer to the followings for relevant sections of Policies & Procedures, the laws and regulations of Hong Kong or Ethics Leadership:
NU SKIN Policies & Procedures
Chapter 2 Operating Your Business
3.3 Inventory and the 80 Percent Rule
6.5 Manipulation of Sales Compensation Plan

Chapter 3 Advertising
7.1 Use of the Internet in Distributor Business
7.2 Permitted Internet Activities
7.6 Internet Selling

CAP 716 The Pyramid Schemes Prohibition Ordinance of the laws of Hong Kong  and Articles 28A and 45A of. 6/96/M of Macau’s Decree-Law

(The name of character in the article is fictitious. No identification with actual person is inferred.)