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Chinese government getting interested in alleged Usana violations

Posted Jan 7th 2008 5:42PM by Zac Bissonnette (RSS feed)
Filed under: Scandals

Usana Health Sciences, Inc. (NASDAQ: USNA) critic Barry Minkow established the Cheating in China website a few months ago, positing that the company's growth and profitability relied on a complex scheme involving the elicit recruitment of Chinese citizens -- a country where multi-level marketing is generally illegal, and in which Usana does not have a license to operate.

According to a press release issued by Minkow's Fraud Discovery Institute this morning, the Nanning Business Administration Department, "Shuan Sheng" Branch Economic Inspection is taking a look.

According to Minkow, "It would appear that the interrogation notice is interested in both the individual and the company as a whole". On the Cheating in China website, Minkow has posted evidence of Usana distributors seeking to recruit Chinese nationals, in sharp contrast with Usana CFO Gil Fuller's proclamation on a 2006 conference call that "We don't have any associates in China".

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Multi-Level Marketing not so attractive anymore

Posted Dec 13th 2007 1:11PM by Tracy Coenen (RSS feed)

Late last week, analyst Douglas Lane at Jeffries & Co. told investors that "direct selling companies" were going to be a good investment in the coming year. His rationale? The industry's ability to penetrate new consumer markets with disposable income, particularly in countries like China, Russia and India.

The news report explained that the "direct selling" industry distributes products by demonstrating them in homes and with product parties.

What the news story left out is the fact that "direct selling" is really a misleading term for what is now more commonly known as multi-level marketing (MLM), or network marketing.

Here's the problem with MLM from a consumer standpoint: The MLM industry has been around for decades, and still fails to be a real player in the retail marketplace. The economy functions by real retail sales from real retailers online and in brick-and-mortar stores. MLM could completely go away and almost no retail consumers would even notice.

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