Avon goes full throttle in China

By Simon Pitman

- Last updated on GMT

Related tags Direct sales Retailing

Avon Products China says it has now employed 114,000 sales staff in
China and is in the process of hiring a further 31,000 recruits
just four months after it was awarded its first direct sales
license in the country.

Direct sales cosmetics companies have been waiting to tap into what is deemed to be a huge potential market following the lifting of a ban on direct sales in the country at the end of last year.

Currently China is seeing some of the largest industry growth in the world, with almost all cosmetic and toiletry categories reporting sales growth well into double figures, figures that are line with GDP that currently stands at 10.9 per cent.

"The high numbers of licensed sales promoters in such a short time reflects the great appeal of the Avon earnings opportunity in the Chinese market, enhancing our confidence in the future of our business in China,"​ said SK Kao, General Manager, Avon China.

"We also are very pleased that nearly 90 per cent of our beauty boutiques have qualified to act as Service Centers under the government's regulations, indicating that our beauty boutique owners want to be involved in direct selling,"​ he added.

Until the new laws were passed to re-introduce direct selling to the China market, Avon had been selling on the market through its beauty boutique retail outlets. Now its direct sales business is being built on those established outlets, a factor that is helping to boost the company's position.

The new model means the company's 5,700 retail outlets offer after-sales services - including order pick-ups, product returns and trials - to sales staffs, as well as providing beauty consultation services to consumers and continuing to sell products at retail.

According to research firm Kline & Company, the cosmetic and toiletries market in China increased 13 per cent from 2003 to 2004, with the country's share of the $147.4 billion global market coming in at $7.1 billion at the manufacturers' level, accounting for nearly 5 per cent of total sales.

"China's share of the global cosmetic and toiletries market may seem small compared to huge markets like the US and Japan, but with a population of over a billion people, the growth potential there is staggering,"​ said Lenka Contreras, vice president and head of the Consumer Products practice for Kline's research division.

Indeed Avon CEO Andrea Jung is expecting big things to come of the market for the company in the near future. At the beginning of the year she stated that the China market could soon add $1bn to the company's bottom line.

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