Cosmetics direct selling company Avon to shut over ten branches in China

Global cosmetics direct selling company Avon is planning to shut down more than ten branches in China, as it exits South Korea and Vietnam due to decreasing sales revenues.

The firm is also planning to lay off 1,500 employees globally, reported news website People’s Daily Online.

Avon will not entirely exit the Chinese market, instead it will refocus on its business strategies and will encourage the opening of franchised stores on the mainland, as it considers the country one of its major markets.

The firm, which entered the Chinese market in1990, registered sales revenue of CNY2.4bn ($382.44m) in 2003.

It has, however, decreased to less than CNY1bn ($159.35m) in 2012.

Avon, in 1998, after direct sales was limited by Chinese government was forced to partake in retail sales, and opened thousands of franchised stores across China.

The firm, in 2006, which gained China’s first-ever license for direct sales, introduced a hybrid strategy, maintaining stores, besides also offering products through representatives.

Avon’s strategies were unsuccessful as the expensive store fees charged by the company.

The firm, in April 2010, named Rene Ordonez as the manager of its Chinese operations in a bid to expand direct sales.

Avon, under the mixed sales strategy, ran into successive losses for a few years, and it was even being averred for some time that the company will exit from the nation’s market.

In spite of the situations Avon faced, experts assume that the firm’s new model may not be fruitful, although it has been operating in China for more than 20 years and has not adapted to the domestic consumers tastes.

Avon Products is a US-based personal care products manufacturer and seller company, which operates in more than 140 countries across the world.

The firm’s portfolio includes fragrances, skin care, makeup, colour compacts and personal care.