Top Biz News
Avon calls it off, for some, in China
By Zhang Lu (China Daily)
Updated: 2006-04-27 10:47
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The world's top cosmetics direct selling firm Avon will cut jobs in China and other countries as part of its restructuring efforts.
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The Chinese operation will be involved in the move, an official from Avon China confirmed yesterday.
The company said the move was a delayering to reduce complexity following rapid growth over the past few years. It said senior management would be brought closer to customers, Avon Beauty Boutique owners and representatives.
"This will significantly increase speed and flexibility in decision-making, make the company more streamlined, efficient and more able to respond to developments," Avon China said in a statement.
Currently, Avon employs 49,000 full-time employees, with about 2,000 of those in China.
Last November, the firm announced a restructuring plan which is expected to cost about US$500 million. It has seen sliding sales including in China.
In the fourth quarter of 2005, the company's global net income was US$183 million, compared with US$289 million the year before.
Avon China saw its revenue decline by 22 per cent during the same period.
As part of the global restructuring plan, Avon China became a stand-alone commercial business unit from this year.
The company expects the restructuring will help reposition it to resume sustainable growth.
Avon China has said sales declined last year mainly because its boutique owners placed smaller orders, being afraid that the resumption of direct selling (which had been banned for seven years) would affect their businesses.
The Ministry of Commerce issued the first direct selling licence to Avon China in February, after China lifted the ban in December. During the ban, brought in because of concern over pyramid schemes, door-to-door sellers were restricted to selling in retail stores.
Avon is the only firm to have been given a licence so far. Other firms are waiting for their applications to be processed.