Herbalife in China

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Herbalife Presentation

Herbalifes Strategy in China

Target increasingly
health conscious
audience
Collaborate with
Chinese
government
Madeleine Albright

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Herbalife Presentation

Usually their incomes improve

tremendously, especially the harder
they work and the more of a
network that they build.
- Madeleine Albright in a
breakfast meeting with the
American Chamber of
Commerce in India

China Investigates Nu Skin

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January 15, 2014: Chinas Peoples Daily publishes an

expose on Nu Skin
January 16, 2014: China's State Administration for Industry
& Commerce (SAIC) investigates Nu Skin, which ultimately
resulted in fine of $540,000
In its statement regarding its probe of Nu Skin the SAIC
said: "For the next step, SAIC will work with other
departments to increase the level of regulation of the direct
sales market and sternly investigate and prosecute any
illegal behavior in the direct sales sector," the SAIC
statement said.
Herbalifes stock fell 9.8% in reaction

Herbalife Presentation

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August 12, 2013: First Financial

Daily publishes Herbalife's Sneaky
Business Activities in China Raised
Suspicion: Disguised Form of
Recruitment Fees Gives away Its
Pyramid Scheme

Herbalife Presentation

Ackman v. Icahn: The Eastern Front

March 11, 2014: Ackman hosts investor call and presentation
accusing Herbalife of violating Chinas direct selling laws
"Pershing Square is confident that Herbalife is violating
Chinese law prohibiting direct selling and pyramid sales."
Market reaction: Herbalifes stock remains flat

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Herbalife Presentation

Ackmans Ally

Aaron Smith-Levin,
Principal, OTG Research
Group
Smith-Levins work
analyzing Nu Skin
contributed to Chinese
regulators initiating an
investigation there

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Herbalife Presentation

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Herbalife Presentation

A familiar shape appears...

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Herbalife Presentation

Ackmans Accusations
1.Herbalife requires 100 RMB payment to become a Preferred
Customer
2.Participants must order products to accumulate volume
points
3.Participants accumulate volume points by recruiting other
participants who in turn order products
4.Distributors recruit other distributors and earn commissions on
new recruits purchases

Herbalife Presentation

Chinese Law

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Herbalife Presentation

Latest Activity: Icahn > Ackman

August 10, 2016: Herbalife won approval from China's Ministry
of Commerce to operate direct selling activities in three
additional provinces in China, bringing the total to 28
Permits Herbalife to reach an additional 57 million people
No indication that Chinese regulators are planning to
investigate Herbalife

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Herbalife Presentation

Herbalife Sales Growth in China

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Herbalife Presentation

The end!