Mainland China Opportunity Training 2004

Overview of Mainland China Market

Mainland China Demographics Land Mass 9,600,000 sq km Shanghai 1% Jiangsu 6% Zhejiang 6% Fujian 11% Guangdong 11% Guangxi 14% Liaoning 9% Jilin 12% Sichuan 30% Other Area 83% 17% Phase II 17%

Mainland China Demographics Population 1.3 billion People Phase II 32% Other Area 68% 32% Guangdong 16% Fujian 8% Zhejiang 8% Jiangsu 17% Shanghai 3% Jilin 7% Liaoning 10% Sichuan 21% Guangxi 21%

Mainland China Demographics Retail Sales 3.14 Trillion Rmb 66% Other Area 34% Phase II 66% Jiangsu 16% Shanghai 9% Fujian 8% Guangdong 24% Zhejiang 14% Sichuan 9% Liaoning 11%Jilin 5%Guangxi 5%

Mainland China Demographics GDP per Capita Jiangsu Shanghai Fujian Guangdong Zhejiang Sichuan Liaoning Jilin Guangxi

2003 China Retail Stores Coverage

2004 China Retail Stores Coverage

2005 China Retail Stores Coverage

Direct Selling: Analysts predict China’s direct selling market will be between $5 billion and $7 billion by 2005 making it the third largest direct selling market in the world. Cosmetic and Toiletries: By 2005 it is estimated that the China cosmetic and toiletry market will reach $8.9 billion in sales. Mainland China Market Projections

Summary of Mainland China Development

Timeline 1990 Beginning of DS Industry 1996 DS Ind. Est. $100 million 1998 Government imposed ban 2001 voted into WTO 2004 WTO Entry (New DS Regulations) 2000 Nu Skin Phase I 2003 Nu Skin Phase II 2002 DS Ind. Est. $1 billion 2005 DS Ind. Est. $5 Billion History of Direct Selling in China

Investigative trips to China Expansion throughout Asia and the World PHASE I - Began investment in China - Acquired Pharmanex assets - Development stalled due to Government imposed ban Revised strategic plan based on Government regulations Acquired retail stores Nu Skin manufacturing plant completed Aggressive expansion plans announced* PHASE II - Retail store model with TE and Executive participation * Total investment through 2002 is US $80 million Nu Skin ’ s History in China

Shanghai Manufacturing Facility

Force for Good Construction of Primary School in Chun An County Provided funds for construction of school Donate textbooks and study materials

Mainland China Business Model

Retail Sales Model All sales must occur at a Nu Skin retail store Sales must occur from an employed sales force China laws and regulations require:

Retail Store Layout

Guangzhou Retail Store Layout

China Remuneration Plan

Customer Customers purchase products at full retail price similar to any other retail establishment Purchases at full retail price SR is responsible for providing ID number to receive credit for purchase

Preferred Customer Individuals who become a preferred customer will enjoy a 10% discount on product purchases Requirements: Initial minimum 500 Rmb retail purchase Future purchases at 10% discount Referred by Sales Representative or executive China Remuneration Plan

Preferred Customer Referral Form Referring ID number Contact information Personal ID number Preferred Customer card included in form

Submit Sales Representative application form at store location where employment desired Obtain the following monthly Net Retail Sales (NRS): QSRI 5000 QSRII 8500 QSRIII Preferred customers continue to purchase at a 10% discount as a QSR Work up to 20 hours per week as temporary employee 260 Rmb base pay plus 5% Retention Bonus and 5% Service Bonus Qualifying Sales Representative

Who can be referred as a SR? Resident of the People’s Republic of China Over 22 years of age No students No full-time military service No government employees China Remuneration Plan

Where to refer SR? Retail Stores SR Applications can be found at: - each retail store location - viewed through the China Business Center on the internet China Remuneration Plan

SR Hiring Procedure Recommended by China Registered Executive or local preferred customer or SR. Interview with Store Manager Qualifications: - received sales training - desire to learn about personal care products - only full-time employees will be hired - no part- time employees - willingness to be employed China Remuneration Plan

Sales Representative Application Personal ID # Date of birth Degree of Education & Major Desired City and Store for Employment

What is Net Retail Sale (NRS) ？ NRS + 17% VAT = Retail Price Example, If Product A retail price is RMB Then, Product A NRS is RMB /1.17 = 100 Net Retail Sales

How to qualify to become a Nu Skin Sales Employee ？ QSR I QSR II QSR IIISR 5,000NRS8,500NRS12,000NRS 8,500NRS ＋ Sales Employee Qualification

Contracted employee of Nu Skin China Preferred Customers who become a SR enjoy a 15% purchase discount Other SR receive a 5% purchase discount SR receive 260 Rmb base pay Same pay structure as QSR, plus 5-15% Retail Sales Bonus on NRS Work up to 20 hours per week at retail store Sales Representative

Sales Employee Benefits Service Bonus 5% –When on duty, personally provide service and complete the sales transaction –When off duty, bringing referred customers to the working store, providing services and complete the sales transaction

Sales Employee Benefits Customer Retention Bonus 5% –Follow and maintain the good relationship between the company and the referred customers –Sales Employees get 5% on all of their circle group customers ’ purchase

Sales Employee Benefits Retail Sales Bonus 5-15%

Base Pay for TSM/SSM TSM ￥ 700+ SSM ￥ 2,000+ *Evaluated by quarterly sales performance review

TSM/SSM Quarterly Sales Performance Evaluation Adjust base pay and title position Occurred in every Jan/ April/ July/ Oct Adjusted base pay and position will be reflected to next 3 months

Quarterly Performance Review process  Ability to abide company ’ s 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 ’ s products  Leadership abilities to supervise and train subordinate sales employees;

International Participation

How to participate in Mainland China Maintain executive level outside of China Participate in China training Take and pass test on China rules and regulations Agree to China Policies and Procedures

How to participate in Mainland China  Register for China activity - attend China specific training and pass examination - submit China Training Agreement (CTA)  Purchase at retail price  Refer Preferred Customers and Sales Representatives  Maintain pin title and maintenance requirements outside of China

No independent distributors - all sales representatives are employees of the company All sales must occur at fixed retail locations through employee sales representatives All product and sales training meetings must be held with personal acquaintances of the individual who organized the training Trainings over 5 people must register with the company and get approval first Nu Skin Executive Responsibilities within Mainland China

Attract customers Attract preferred customers Encourage preferred customers and others to apply to become a sales representative Participate in product and sales training to employed Sales Representatives All sales representatives and retail store employees are employed by Nu Skin Nu Skin Executive Responsibilities within Mainland China

Training Meetings Location –only held in a home or a public establishment –not in a hotel room No more than 5 may attend including the trainer Personal acquaintances –all cold-calling techniques strictly prohibited Duration –Meetings can last no longer than 3 hours –No more than 1 meeting per day

Training Meetings Fees –No fees can be collected for meeting attendance Content –Only In-China training presentations approved by company can be used - refer to China Business Center –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 availability in China Nu Skin Premium Scion Epoch Color by Nu Skin Pharmanex will be available in early 2005 *Details please refer to Product Catalog link

Additional Communication by China Business Center

China Business Center The best source for China related information Latest updates from China management Approved training material View China Remuneration program View product catalog Access all employee applications and forms Access retail store location information