Avon Products in China - Case Study

Topics: Multi-level marketing, China, Direct selling Pages: 3 (1004 words) Published: May 13, 2012

The Avon case presents the evolution of its endeavors in China during the 1990s. With a renewed strategy of aggressive expansion towards conquering the world market of beauty products and direct selling, Avon arrived to China in 1990, establishing its operations base in Guangzhou. Being the first direct selling company that entered the Chinese market, Avon faced several obstacles mostly in terms of selling the product, given that in the Asian Giant there was not usual to sell door to door to the clients and the use of make-up had previously been considered ‘bourgeois’, ostentatious and mostly, as luxury goods.

Avon’s success can be explained by its smooth strategy to enter the Chinese market. Instead of entering to China as a new American company, Avon was presented to the market as a joint venture with the local cosmetic company Guangzhou Cosmetics Factory, that also proved to be cooperative and astute. The entrance happened in a crucial moment; the country was going through several changes that allowed the acceptance of cosmetics among the Chinese women and with the increase of the purchasing power among Chinese salary workers, they were able to afford it. Finally, one of the keys to Avon’s initial success was how it adapted to China’s cultural and geographical challenges.

In the beginning, the direct selling concept was foreign to China, creating a challenge in training, especially in how to access customers. It also presented a distribution problem making it difficult for a company to get to the customer; reason why Avon created the branch distribution system, which consisted in setting up branches that would serve as distribution and training centers. Avon also started to make special lines focused in the Chinese features, even focusing in increasing the amount of Chinese raw material used in its products, i.e. in 1992 only 10% were local raw materials, and by the end of 1996 there were nearly 95%.

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