A source close to DSN is reporting that the Chinese government is conducting random checks to ensure companies selling wellness products in China are complying with the terms that came out of the 100-day freeze that ended in April of this year.
The DSN source added that it’s not strange for the government to follow up, especially given how many wellness companies were affected with the 100-day action, direct selling industries included. DSN will update as soon as new information is available.
In our July 2019 feature titled The China Conundrum, we discussed the possible impact China’s 100-day review of the health market would have on direct selling companies past the first quarter of 2019. Although optimism was high at the end of the first quarter that business would return to normal following the review period that ended in April, sales in China have decreased dramatically in the second quarter for Herbalife Nutrition, Nu Skin, and USANA. This resulted in all three companies resetting expectations for the second half of 2019. This new action will now cast a shadow on Q3 and Q4 earnings and possibly into 2020 .
According to WFDSA, 46 percent of the global revenue for direct selling came from Asia/Pacific (32% North America, 21% Europe) with China its largest market making up the bulk of that number (nearly 40%).