Retailing, Franchising, and Consumerism Business Intelligence in China

Herbalife's Chinese Manufacturing Facility Will Complement Retail Activities

Herbalife Ltd. held a ground-breaking ceremony in Changsha, Hunan, for its state-of-the-art extraction facility for botanical extracts, powders and pure compounds to be used in its inner and outer nutrition products.

Herbalife's 80,000 sq. ft. facility in Changsha will be capable of processing approximately 8,000 metric tons of raw materials annually through extraction, purification and drying of powders and liquids. The new plant will reportedly create approximately 120 local jobs.

Herbalife received its first direct-selling license in China in March 2007 and now has licenses for the company to conduct its direct-selling business in 16 provinces. Herbalife also currently operates 75 retail stores in 30 provinces in China.

The new facility, expected to open in the second half of 2011, is part of the company's 'seed to feed' strategy for quality control, purity, and traceability on all ingredients throughout its supply chain. The facility is a joint venture with NatSource Chemicals and its principal Dr. Qun Yi Zheng, Ph.D., a leading expert in the field of extraction and processing of natural compounds for use in food, supplements and pharmaceuticals.

The new extraction facility will purchase botanicals directly from farms in Hunan province and other regions, perform extraction and other conversion processes and then send these processed raw materials directly to Herbalife's manufacturing facilities in Suzhou and California or to its third party manufacturers throughout the world. The new extraction plant will produce botanical extracts including teas, guarana, chamomile, broccoli and bilberry, among others, for use in many of its products. Herbalife is also in the process of entering into strategic supply agreements with farmers in Hunan and other provinces to provide ultimate traceability for its ingredients.

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