Nu Skin sees $1b in sales for anti-aging products

Nu Skin Enterprises, one of the world's top five direct-selling companies, expects its sales in China to exceed $1 billion this year and to achieve five-fold growth in the coming five years.

The anti-aging product developer, manufacturer and seller is eyeing opportunities brought by China's aging society and growing individual incomes, according to Vincent Cheng, regional vice-president of West & North Mainland, Nu Skin Greater China.

"We have full confidence of reaching that goal," he said, adding that his company had planned to increases sales to $1 billion in 2014 from $200 million in 2009.

"We will realize that $1 billion barrier earlier than planned. Within our next five-year plan, we think getting five times that growth is reasonable," said Cheng.

To support the plan, Nu Skin was just launched a regional headquarters in Shanghai with total investment exceeding 350 million yuan ($56.55 million).

The headquarters is for the Chinese mainland, Hong Kong, Macao and Taiwan, and is the company's first regional headquarters outside its home market, the United States.

The facility is composed of a research and development center, a customer experience center and manufacturing facilities.

"It can support 10 times the current growth of Nu Skin in Greater China," said Cheng.

China had 186 million people over the age of 60 by the end of 2012, or 14.3 percent of the population.

The proportion of aging people will jump to 25.4 percent by 2033, and one-third by 2050, according to the Ministry of Human Resources and Social Security.

Kunal Sinha, the chief knowledge officer at marketing firm Ogilvy & Mather, added that the spending power of those senior citizens is rising, and they now command about 300 billion yuan to 400 billion yuan in annual disposable income, which is expected to continue growing, prompted by higher individual income growth and wealthier offspring.

Cheng said that a larger proportion of Chinese citizens are willing to spend on anti-aging, nourishing and health supplements and therapies.

One of the key challenges for Nu Skin is to develop some tailored products for older customers, and the new R&D facility is likely to play a major role in that.

As one of the world's top five direct-selling companies, Nu Skin in China is facing serious competition from Amway Corp, the largest multinational direct-seller by sales and network coverage.

Amway's sales in China reached 27.1 billion yuan in 2012, compared with 26.7 billion yuan a year earlier, making the country its largest market, accounting for more than a third of its global income, said Doug Devos, Amway's chairman and chief executive.

Amway in China is carrying out R&D into traditional Chinese medicine-based healthcare products, and since last year has invested 600 million yuan in building a second China manufacturing base in Guangzhou, Guangdong province.

Hu Yuanjiang, an independent analyst who focuses on the direct-selling industry, said that Amway and Nu Skin both have room to develop in the country.

Nu Skin seems to be more focused on the anti-aging sector, while Amway is diversifying its products, adding new ones such as water and air purifiers, Hu said.

The direct-selling market, which helps create jobs and diversify retailing channels, is forecast to achieve double-digit growth in China in the coming years.

The world's other three largest direct-selling giants - Avon Products Inc, Mary Kay Inc and Herbalife International - also have a presence in China.