Mainland China Opportunity Training May 2007
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Transcript of Mainland China Opportunity Training May 2007
Mainland China Opportunity TrainingMay 2007
Overview of Mainland China Market
China Statistics
• Land Mass: 9,600,000 sq km
• Population: 1.3 billion
• Retail Sales: RMB5.395 trillion (2004)
Nu Skin (China) Retail Store Coverage
Direct Selling:
It is forecasted that revenue from direct selling in China will exceed
RMB100 billion by 2008.
Cosmetic:
In the next few years, cosmetic market in China will continue to
expand at an annual rate of about 10% with sales reaching RMB80 billion
by 2010.
Nutrition Products:
It is forecasted that by 2010, revenue from nutrition products in China
will exceed RMB120 billion.
Mainland China Market Forecast
Summary of Mainland China Development
Timeline
1990 Beginning of DS Industry
1996 DS Industry estimated revenue:
US$100 million
1998 Government imposed ban on
Chuan Xiao
2001 voted into WTO
2005 Direct Selling Regulations promulgated
2002 DS Industry estimated revenue:
US$1 billion
2005 DS Industry estimated revenue:
US$5 billion
History of Direct Selling in China
Nu Skin (China) obtained direct selling license
in July 2006
Nu Skin (China) started direct selling in Shanghai
in January 2007
1993 – Investigative trips to China
1993-1997 – Expansion throughout Asia and the world
1998 – 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 – Launched Retail Store Model in mainland China
- with TE and Executive participation
2006 – Nu Skin (China) obtained direct selling license
2007 – Nu Skin (China) launched direct selling
By the end of 2006, investment in China reached US$100 million.
Nu Skin’s History in China
Shanghai Manufacturing Facility
Force for GoodConstruction of the First Hope School in
Chun An County
•Provided funds for construction of school
•Donated textbooks and study materials
•Completed in September 2002
Force for Good
Nu Skin has helped build 5 Hope Schools
• Nu Skin Hope School in Zhejiang Chun An County
• Nu Skin Hope School in Zhejiang An Ji County
• Nu Skin Hope School in Xing Hua City of Guangdong Mei Zhou
• Nu Skin Hope School in Jiangsu Si Yang County
• Nu Skin Hope School in Jiangxi Xin Yu City
In the next few years, Nu Skin will continue to help build Hope Schools in China. The total number of schools will be more than 60.
Force for Good 善的力量未来的 5年内,如新还将继续捐资协助建造所希望小学。
• Opened a VitaMeal Plant in Jixi, Heilongjiang in May 2005• Donate VitaMeal to the poor area of China through China Foundation for Poverty Alleviation
Mainland China Business Model
Retail Store + Sales Employee Model and Direct Selling Model
Preferred Customer
QSRSales
Employee
Prospects
Part-time Direct Seller
Nu Skin Retail Store
China Direct Selling Regulations
• To conduct direct selling, a direct selling company should establish branches and service centers in a province, autonomous region or municipality where it intends to conduct direct selling. A direct selling company can only conduct direct selling business in the approved area. • The categories of direct selling products are defined as follows:
Cosmetics (including personal care products and facial and hair beauty products) Health food (The “Health Food Approval Certificates” must be acquired from relevant departments.) Cleaning products (personal hygiene products and daily-use cleaning products) Health care equipment Small kitchen appliances
• The compensation that direct selling companies pay to their distributors may only be calculated based on the personal sales directly made by the distributors to the consumers. The total amount of the compensation (including commission, bonus, various incentives and other economic benefits) should not exceed 30% of the personal sales directly made by the direct selling distributors. Compensation should not be based on group volume.
China Remuneration Plan
Customer
Customers purchase products at full retail price, similar to any other retail establishment.
• Purchase products at full retail price• Direct Seller or Sales Representative is
responsible for providing their ID number so that the volume can be counted towards their sales volume.
China Remuneration Plan
Preferred Customer Individuals who become a Preferred Customer will enjoy a 10%
discount on product purchases.
• Requirements:
– Initial minimum RMB500 purchase or RMB800 ARO
commitment
– Future purchases at 10% discount
– Referred by Direct Seller/Sales Representative or Executive
China Remuneration Plan
Direct SellerDirect selling companies and their Branches should not recruit the following personnel:
• Younger than 18 years,
• Have no or limited civil capacity;
• Full time students;
• Teachers, doctors, government officials and military personnel in active service;
• Full time employees of direct selling companies;
• People from aboard; or
• Those who are forbidden by law and administrative regulations to do part-time jobs.
• Those who are forbidden by law and administrative regulations to do part-time
jobs.
China Remuneration Plan
Direct Seller Application Form
China Remuneration Plan
Direct Seller Bonus (DSB)• A new DS who maintains 2000 GNRSV for the first three months can receive
additional 5% bonus.• Direct seller who maintain 2000 volume and above in their previous three
months can obtain an extra 5% stability bonus added to their basic monthly compensation
Sales volume ( tax included) (%) Stability bonus
1,000 – 1,999 10% 0%
2,000 – 4,999 10% + 5%
5,000 – 9,999 15%
10,000 – 49,999 20%
50,000+ 25%
China Remuneration Plan
Direct Sellers will not get paid in any form on the sales volume of other Direct Sellers and Sales Employees.
The sales volume of Direct Sellers must come from their combined sales made directly to Preferred Customers and Retail Customers based on the products that the company is approved to sell through direct selling.
Once the Direct Seller has reached 30,000 from their past six months and has 10,000 in their current month, the Direct Seller may apply to become a full time SR of Nu Skin and be promoted to be a Sales Employee.
Sign a labor contract or agreement with the company
Submit Sales Representation Application Form
A QSR may become a SR if he meets the volume requirement of
RMB24,000 within six months and the minimum monthly Net Retail
Sales of RMB4,000.
Maximum number of work hours in retail store each week: 20
Base salary of RMB260, 10% sales bonus
Social benefits
Qualifying Sales Representative (QSR) ( Applicable to unapproved direct selling area )
China Remuneration Plan
Sales Representative Sign a labor contract or agreement with the company
Pass Direct Seller or QSR qualification
Minimum monthly net retail sales: RMB10,000
Maximum number of work hours in retail store each week: 20
Base salary, 20-25% Retail Sales Bonus
Social benefits
China Remuneration Plan
Sales Representative Application Form
• ID Number
• Birth Date
• Education
• Affiliated retail store,
city of residence
• What does Net Retail Sales (NRS) refer to? It refers to actual purchase price.
• What is bonus base?
Bonus base = NRS/1.17*0.9
Example:
• Assuming the retail price for product A is RMB500 and the NRS is RMB425 (15% discount with ARO commitment), then the bonus base = 425/1.17*0.9 = RMB327.
China Remuneration Plan
Retail Sales Bonus (RSB) 20%-25%
China Remuneration Plan
PGSV Bonus %
10,000-24,999 20%
25,000-49,999 21%
50,000-99,999 22%
100,000-149,999 23%
150,000-199,999 24%
200,000+ 25%
Remark: The RSB is calculated separately from the QSR volume.
China Remuneration Plan
Promotion
Sales Employee with outstanding performance and leadership ability will have the opportunity for advancement. Sales Leaders are responsible for guiding and conducting weekly training to their supervised Direct Seller, QSR and SR.
Sales Executive/Senior Sales Executive/Sales Manager/Senior
Sales Manager/Sales Director/National Sales Director
Quarterly Evaluation
• Occurred in every January/April/July/October
• Adjusts base salary and title position
• Adjusted base salary and title position will be reflected
to the next three months.
China Remuneration Plan
Quarterly Evaluation Process
Ability to abide by company policies
Ability to establish long-term relationships between customers and the
company
Total number of active Preferred Customers for the quarter
Number of new Preferred Customers for the quarter
Ability to sell company products
Leadership ability to supervise and train subordinate sales employees
China Remuneration Plan
International Participation
How to Participate in Mainland China
Maintain Executive level outside China
Participate in China training
Take and pass China Opportunity Qualification Test
Be familiar with and agree to China Policies and Procedures
Register for China activity
- Attend China specific training and pass examination
- Submit China Training Agreement (CTA)
Purchase products at 10% discount with China ID (CN03#) or at 15%/20% discount with ARO commitment
Refer Preferred Customers and Direct Seller/Sales Representative
Maintain pin title and maintenance requirements outside China
How to Participate in Mainland China
How An Overseas Distributor Becomes Qualified to Count His/Her China Volume
– Holds a Chinese passport or spends 80% of his/her time in the mainland China; submits application to the Nu Skin branch office he/she has registered with and gets approval from the branch office.
– Has 12 Breakaways (paid as BD) outside China in the current month
How to Participate in China
• Attract customers
• Attract Preferred Customers
• Encourage Preferred Customer to become a Direct Seller or a Sales
Representative
• Participate in product and sales training
• All sales activities must be done through company sales representatives or
contracted direct sellers of Nu Skin (China)
Nu Skin Executive’s Responsibilities in Mainland China
Training Meetings
All product and sales training meetings can only be held in public
establishment except for hotels.
The meeting attendees must be personal acquaintances (no more than five
attendees including the trainer).
All cold-calling techniques are strictly prohibited
The trainer must report to the company and obtain approval from the
company if attendees are more than five.
Nu Skin Executive’s Responsibilities in Mainland China
Training Meetings• Fees
– No fees can be collected for meeting attendance
• Content
– Only In-China training presentations approved by the company
can be used. Please refer to the China Business Center (CBC).
– Meetings should be related to:
• Product Training
• Sales Training
• Customer Service
• Company Policies
Do: • Provide critical training on
– local business model review
– local product training
Training Rules
Do Not: • Discuss Global Compensation Plan
• Promote get-rich scenarios
• Discuss future finances and retirement
• Talk negative about government enterprises
• Talk about distributor groups
Product Provided in China
• Nu Skin Personal Care Products
• Sicon
• Epoch
• Colour by Nu Skin
• Pharmanex Products
* Please refer to the online Product Catalog for details
“Chinese Business Center”A Good Communication Channel
China Business Center
The best source for China related information
• Latest update from China management
• Approved training material
• View China Remuneration Program
• View China catalog
• Download various application forms
• Access retail store location information