Edited and translated by Liang Jun, People's Daily Online
In the past decade, direct sales giant Avon Products saw sales revenue in China decreasing from 2.4 billion yuan in 2003 to less than 1 billion yuan in 2012, according to China National Radio.
The U.S. cosmetics company Avon Products plans to lay off 1,500 employees in the world, and retreat from South Korea and Vietnam. Insiders say it will shut down more than 10 branches in China to cut direct sales business and encourage opening franchised stores.
As world's largest cosmetics direct seller, Avon entered China in 1990 and set up a joint venture. The company witnessed three adjustments to adapt to Chinese market.
In 1998, it was forced to turn to retail sales and opened thousands of franchised stores across China after direct sales was limited by Chinese government.
In 2006, the company ran with a "hybrid" model, maintaining its stores while also selling through reps, after it won China's first-ever license for direct sales. But both the number of stores and sales revenue saw dramatic slip caused by the expensive store fees charged by the company.
In 2008, the company confronted bribery scandal and sales worsened. In April 2010, Rene Ordonez, an Avon veteran who managed the company's Southern Latin America region was named manager of its China business to expand direct sales.
Under the mixed sales model, Avon witnessed successive losses for a few years and it was even said for a time that the company will retreat from China. Till last March, newly-appointed head of Avon's China business John Lin brought reform to the company and Avon began its fourth adjustment in China.
Avon underscores China is one of its most important markets. Retail sales in China will get strong support and direct sales business will be reduced. It is understood that Avon's latest strategy provides new retail channels of marketing and business development group, responsible for participation in the formulation of strategy of retail sales and speeding up store expansion.
Despite this, expert said Avon's prospect is not optimistic because although it enters China for more than 20 years, it has not adapted to the domestic market.
Read the Chinese version: 雅芳关停中国区十多家直销分公司 加码零售业务
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