NuSkin and Amway has been in HK since I was a kid. They are MLM and therefore totally legal. They have big offices, lots of public advertisments, lots of seminars and lots of sales forces. Believe me, if there are anything illegal in their operations, the HK government would have arrested them. There were companies doing pyramid scheme in Hong Kong and have been arrested. HK government made TV commercial warning people don't fall into the pyramid scheme so everyone in HK are well educated about the trap. http://www.police.gov.hk/offbeat/688/0111_e.htm
What distinguish MLM from Pyramid scheme is that Pyramid Scheme requires new joiner to pay joining fee/participation fee, on contrary, MLM don't require any fee, new joiner only need to pay for the products they purchased for own consumption. If they find the product is good, they can refer other people to purchase the product directly from the sales office and the referer gets the commission.
Furthermore, Citron's accusation of Nuskin smuggling goods from HK to Mainland China is total nonsense. There's a super tight custom control between HK and Mainland China. We are not talking about a few packs of cigarettes, we are talking about billions dollars of pills and gels. It's just not possible to transfer such a big amount of medical goods across the boarder without notice.
Hong Kong is part of China but it's a Special Administrative Region thus it got it's own law system which is differenct from the China law. MLM is legal in Hong Kong but not necessary means it's legal in China. What I want to state are: 1) Nuskin is legal in Hong Kong. 2) Both Hong Kong and China are very serious about Pyramid Schemes Crime. 3) The laws against Pyramid Schemes Crime in both Hong Kong and China are very well established and executed. Thanks for your article, it further confirms this point. 4) If a high profile company that's been operating in Hong Kong and China for over 8 years and never encountered any legal problem, they must know the law very well and very carefully obeying the law. 5) Doing business in China requires a tight relationship with the Chinese officials. I am pretty sure NuSkin has already established it's relationship with the big officials or it wouldn't be able to grow so fast in Mainland China. 6) Due to this strong relationship, those so called evidents provided by Citron won't able to hurt NuSkin at all. 7) The whole China dispise Citron because it's constantly attacking China listed company that makes many people including the officials to lose money. This incident will only make the public to believe NuSkin is indeed operating legally in China and Citron is once again making false allegation to short the company.
so are the chinese authorities cracking down on the company? it is only illegal if the authorities say so. For all we know, if authorities look the other way, it doesn't matter Left says. Just like these VIE structures that Chinese companies use to get around local listing rules, chinese officials know it happened for years, some shorts screamed about it but authorities haven't done anything about it.