China's Ministry of Commerce is stepping up its supervision and regulation of the direct selling market and said it will be stricter on the entry of new companies that engage in direct selling.

The decision came a day after US-owned Nu Skin Enterprises was found to have violated regulations by conducting its business beyond what was permitted.

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Nu Skin, a direct seller of anti-aging and other skin care products, was fined 1.5 million yuan by Beijing's State Administration for Industry and Commerce (SAIC) on Monday, for exaggerating the effectiveness of its products to deceive customers.

Shanghai's SAIC also slapped Nu Skin with fines and product confiscations amounting to 3.6 million yuan.

Nu Skin opened its China stores in 2003 after being granted a license to conduct direct sales, one of the first overseas companies to receive the ability.

After a decade of steady growth, the skin care product developer announced in April 2013, that it expects its China sales to breach the US $1 billion mark.

It based the sales projection on China's large number of people approaching the age of 60, its target market.

However, in January this year, the state-owned People's Daily accused Nu Skin of exaggerating its products' value in brochures and the advertisements that it passed on as news.

The SAIC acted on the People's Daily report by ordering an investigation into the alleged deceptive business practices of the company, which resulted in Monday's findings and penalty.

The Ministry of Commerce said it has talked to the Nu Skin management in New Work and ordered them to train their sales staff on proper, legal business procedures.