AVON GETS A GREEN LIGHT TO RESTART CHINA BUSINESS

NEW YORK — Avon Products Inc. said Friday it had received a government go-ahead to resume operations in China as a wholesale and retail business.
The company hopes to be back in operation a week from today.
Like all other direct-selling companies, Avon has been idle since April 21, when all such firms were prohibited from selling products or recruiting sales representatives in China.
Under the new government license, Avon said it intends to operate as a wholesaler to Chinese retail stores and to convert its approximately 75 branch centers into retail outlets.
The conversion will be profound. Under the old arrangement, Avon employed 50,000 sales reps.
“We are delighted that Avon is once again able to serve the people of China,” said James E. Preston, Avon’s chairman and chief executive officer. “We have made a long-term commitment to that market and we look forward to working with the Chinese government to insure that ethical companies like Avon have the opportunity to build productive, profitable businesses there.”
Avon entered China in 1990 and quickly built its sales. By 1997, volume grew to about $75 million, about 1.5 percent of Avon’s global sales of $5.1 billion.
An Avon spokesman said the company expects to continue dealing with many former reps on a customer basis as the business evolves under its new license.
Considering the company had lost most of the second quarter during the government-ordered shutdown, it would be “overly optimistic” to expect this year’s revenues to match those of 1997. He acknowledged that sales probably would be lower while Avon rebuilds its business.
Later this year, the company plans to open a manufacturing plant in Conghua in the southern province of Guangdong.

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