The Operation and Management of The Operation and Management of A Direct Selling CompanyA Direct Selling Company

Nu Skin As An ExampleNu Skin As An Example

National Sun Yat-sen UniversityNational Sun Yat-sen University

Presented by Johnathan KunzVice President, Nu Skin Taiwan

May 23, 2006

Johnathan Kunz – Vice President of Sales, Nu Skin Taiwan

Lecturer Profile

Joined Nu Skin Enterprises in 1997

Account Manager

MBA-Brigham Young University 2001

Global Business Opportunity Development

New Market Development

Appointed as Vice President of Sales for Nu Skin

Taiwan in April 2004

President of Nu Skin TaiwanJohn Chou

Nu Skin Taiwan, Inc., Taiwan Branch President

World Federation Direct Selling Association

Association Advisory Council member for Asia Pacific Region

Taiwan R.O.C Direct Selling Association Chairman (1997 – 2000, 2 terms, 2-year term)

Taiwan R.O.C Direct Selling Association Standing Director2001 – 2006, (current, 2-year term)

Chinese Taipei Olympic Committee Consultant

1. Nu Skin Enterprises Overview 2. Nu Skin Enterprises Milestone

3. Nu Skin Taiwan Milestone 4. Company Mission and Vision

5. Compensation Plan 6. Product/Marketing Strategy

7. Company Culture 8. PR

9. Communication 10. Distributor Support

11. Service Centers and Logistics 12. Code of Ethics

Presentation Structure

Nu Skin Enterprises OverviewNu Skin Enterprises Overview

Nu Skin Enterprises

Founded 1984

IPO in 1996New York Stock Exchange

• Operations in 41 markets

• Premium-quality products

• Tradition of innovation

• Top-10 U.S. direct-selling companies

Company Overview

Direct Sales Overview Top U.S. Companies

Revenue Products

Avon $7,700M Personal Care

Amway $6,200M Various

Mary Kay $1,800M Cosmetics

Herbalife $1,300M Weight Loss

Tupperware $1,200M Household

Products

Nu Skin Enterprises $1,100M Skincare /

Nutrition

Pampered Chef $ 700M Home CareSource: Company reports

Financial ResultsAnnual Revenue Since 2001

In Millions of Dollars

$1,181$1,138

$986$964

$886

$800

$900

$1,000

$1,100

$1,200

2001 2002 2003 2004 2005

Revenue by Geography2005 Results

SouthAsia/Pacific

7%Other Markets

4%

GreaterChina/SE Asia

20%

North Asia56%

North America13%

Nu Skin Enterprises MilestoneNu Skin Enterprises Milestone

Nu Skin Taiwan MilestoneNu Skin Taiwan Milestone

Founded in 1992Reached top 10 in the first year1996 – (Business Weekly) survey: Top brand1997 – 500 Top Companies service industry :Ranked #96

1998 – Founder visited President Lee1999 – Endorsed by COC2002 – 10th Anniversary. Founder visited President Chen2003 – (China Times) survey: #1 in Brand Awareness, Product Satisfaction, Corporate Image, Distributor Character2004- Outstanding Performance: Revenue Growth +11%, EGB Bonus Growth +10%, Executive Growth +102%2005 – Gold Medalists Endorsement Chen Shih Shin

Company Mission and VisionCompany Mission and Vision

Mission Statement

Our Mission is to be a force for good throughout the world by empowering people to improve lives with rewarding business opportunities, innovative products, and an enriching and uplifting culture.

Vision Statement

Our Vision is to become the world’s leading direct selling company by generating more income for distributors than any other company.

Direct Sales OverviewSelected Top Direct Selling Companies

Avon $7,700M 11% $ 847M

Amway $6,200M 33% $2,046M

Mary Kay $1,800M 15% $ 270M

Herbalife $1,300M 33% $ 429M

Tupperware $1,200M 10% $ 120M

Nu Skin Enterprises $1,180M 43% $ 507M

Pampered Chef $ 700M 10% $ 70M

Source: press releases, company estimates

Commission Rate Total PayoutAnnual Revenue

Compensation PlanCompensation Plan

Innovative Compensation Plan

Global Seamless

6 Generation 5%

Entrepreneur Driven and Most Rewarding Opportunities

We Create MillionairesGlobal

20 Millionaire - 20 accounts

10 Millionaire – 20 accounts

5 Millionaire – 71 accounts

1 Millionaire – 463 accounts

Taiwan

10 Millionaire – 1 account

5 Millionaire – 6 accounts

1 Millionaire – 52 accounts

Leaders Recognition

Product/Marketing StrategyProduct/Marketing Strategy

Nu Skin Products - All of The Goods, None of The Bad.

Pharmanex Products - Provided by Natural, Proven by Science

R&D Team – Top ScientistsOver 130 Scientists

Dr. Carl Djerassi

Worldwide labs

In Search of Excellence - Company Awards -

The Measurable Difference

ProDermBiophotonic ScannerScience technology breakthrough

Best Products Certified

5 Health Food Licenses

BioTech Awards

Innovation Award Green Mark

Product EndorsementCOC

Gold Medallists

Pharmacological Standard - Product Quality / 6S

1. Selection

2. Sourcing

3. Structure

4. Standardization

5. Safety

6. Substantiation

Brand AwarenessChina Times Survey in 2003

Brand Awareness

Product Quality Satisfaction

Corporate Image

Distributor’s Character

Company CultureCompany Culture

Culture

“Our mission is to be a force for good in the world ….”

“Nourish the Children may be 5 percent of what we do, but it is 95 percent of who we are.”

–Blake Roney

Nourish the Children

Nourish the Children

VitaMeal Production Facilityin Lumbadzi, Malawi

New VitaMeal Facility Under Construction in Jixi, China

Will have capacity to produce morethan one million meals per month.

Produces enough food to feed 30,000 children a day and provides jobs for 700 Malawians

NTC Global Sales Report: Donated over 40 million meals through Nourish the Children .

Force For Good

Force For Good Foundation

I want to be thethe do good company in the world.

- Blake M. Roney

Force For Good Foundation 25 cents for each Epoch product sold

EB research and care

Seacology Foundation

Secure rain forest

Dr. Paul Cox

$13 million donated Since 1996

Foundation donates more than $1 million actually to projects around the world

Force For Good In TaiwanNTC – Vita Meal Donation To Hua Lien ( 花蓮 )

Stanford University史丹佛大學醫學院

School of Medicine

EPIDERMOLYSIS BULLOSA RESEARCH PROGRAM

先天性表皮鬆解症 (EB)研究計劃

•Epidermolysis is breaking apart of skin “Epidermolysis”是皮膚破裂的意思

•Bullosa means blister “Bullosa”是水泡的意思

•Epidermolysis Bullosa = EB EB=先天性表皮鬆解症

How EB Got Its NameEB名稱的由來

Force For Good In TaiwanEB Family Gathering

Force For Good In TaiwanEB Trip – Lu Gang 鹿港

Force For Good In TaiwanEB Trip – Hong Kong

Force For Good In Taiwan

Donate 500 bottles of ReiShi Max To Taipei Government for fighting SARS

PRPR

TV Program Interview

Media Exposure/ReportTo build up corporate image and recruit people who want to start their own business to become Nu Skin distributors, there has been a lot of propaganda in newspaper and magazine.

Media Exposure/Report

Athlete Health Forum

Press Conference

CommunicationCommunication

Magazine

BD Update

Nu Skin Update

Web Site

SMS

GWP

E-mail Broadcast

E-mail Subscription

Distributor SupportDistributor Support

RC/Taiwan Convention

Success Seminar Group Success Seminar

Distributor Training Scan Taiwan

TE Trip Incentive Trip BD Meeting

Fashion Workshop / Health Seminar

Account Manager

Business support

Communication bridge between the company & business builder

Sales promotes

Service Agent

Walk in center service

Phone in order service

Product returns

Warehouse

ACD

Customers service information center

Follow up customers inquiries & special requests

Front Line Major Functions

Branches/Service CentersBranches/Service Centers

Walk-In Centers and Display

Showcase - Gym/SPA

如新泉源會館Nu Skin Fountain Club

Ordering Type

Walk in

Phone in

Fax

Web ordering

ARO

COD

Code of EthicsCode of Ethics

Education/TrainingPolicy and ProcedureEqual Playing Field