Ailing Chinese business model hits Avon sales

Direct sales giant suffers 31% revenue decrease in China in Q1 2010

Avon Products Inc has suffered a 31% revenue dive in China in the first quarter of 2010 as compared to the same period of 2009. According to the direct-sales giant, this downward trend reflects fundamental challenges in the company’s hybrid business model as well as professional fees associated with its internal investigation into alleged violations of China’s Foreign Corrupt Practices Act.

Avon is the first license bearer for door-to-door sales in the country and currently operates a hybrid model (which also includes retail) in the region. However, the company is now looking to move entirely towards direct selling over the next 18 months. In addition, former manager of Avon’s southern Latin America region, Rene Ordonez, has been put in charge of the company’s China business.

Avon also stated that its internal investigation into the two-year-old alleged bribery of foreign government officials has expanded beyond China and into four other international units.

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