Avon streamlined management in China directly by global headquarters

Gao Shoukang, president of Avon Greater China, confirmed to the Morning Post yesterday that in the recent global layoffs of Avon, certain management personnel in the Chinese region will also be “streamlined”.

Avon, a US cosmetics distributor, announced on the 24th that it will lay off 1300 people before the end of this year. According to Avon's annual report, as of December 31 last year, the company employed a total of 49,000 full-time employees. Of these, 8,700 are in the United States and the remaining 40,300 are all over the world. Gao Shoukang said: "This layoff is mainly the actions of the head office and will also involve the China region. However, details such as the number of layoffs and when they are carried out cannot be disclosed for the time being."

Avon China released its "four-tier adjustment" on the previous day

The statement stated that it regrets that some employees left the company due to this structural adjustment. Gao Shoukang also stressed: “This structural adjustment is an issue within the management of Avon, and will not involve stores and direct sellers. It has no impact on the direct sales business that has just started in China.”

Avon announced at the beginning of the year that due to restructuring expenses and product price reductions, the fourth quarter of 2005 had a sharp drop of 37% from the same period in 2004. In addition to restructuring expenses, product price cuts, rising operating expenses, and an increase in the proportion of low-margin products all contributed to the decline in fourth-quarter earnings. Avon predicts that the company’s multiyear restructuring plan will cost about US$500 million.

According to Avon’s structural adjustment plan released at the end of last year, Avon will separate China from Central Europe and Eastern Europe. From then on, Avon China will no longer be affiliated with the Asia-Pacific region, but will directly accept the leadership of global headquarters. The report also stated that Avon will cut 20%-30% of management personnel globally.