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Avon Receives First Direct Selling License in China

Direct-Selling Model will be Rolled-out Nationwide

Mar 2, 2006

(March 2, 2006, Beijing)--Avon confirms it has received official notification from the Ministry Of Commerce on being granted the First Direct Selling Business License in China. As a result of receiving the license, Avon will now roll-out its previously tested single-level direct-selling model nationwide.

Andrea Jung, Chairman of the Board and CEO of Avon Products, Inc. remarked, "It is such a gracious honor for Avon China to be granted the First Direct Selling Business License by the Chinese government. This is an important milestone for our company. We take very seriously the responsibility that comes with being the first to receive the license. Our commitment is to ensure that our business model will be in-line with all Government regulations and guidelines."

Avon will roll-out its business model from the test cities where the pilot program was conducted to other cities and provinces in China nationwide. The new business model will see the addition of Direct Sales Representatives, and Avon's existing 6,000 Beauty Boutique owners, who continue to be very important as Avon China's lifeblood. Avon's future development in China is based on our Beauty Boutiques which have been transformed to highly qualified service centers after systematic trainings by Avon. Therefore, while undertaking Avon products sales, the Beauty Boutiques also have the extra earnings opportunity through providing services to the Direct Sales Representatives and the consumers. For consumers, the changes will mean easier access to Avon products and services.

S.K. Kao, General Manager of Avon Products (China) Co. Ltd. commented, "As part of our business model, Avon will continue its focus on protecting the rights and interests of consumers and on fair dealings with our distributors. The roll-out of the business model will be undertaken in a thorough and diligent way which not only ensures that we meet and comply with direct selling regulations and with the high standards Avon has set for training and customer satisfaction, but also provides Avon's Beauty Boutiques sustainable growth power. We have already completed extensive training of our field organization to enable them to support the new business model and deliver well on customers' needs. We will ensure our approach to business is consistent with the Government's expectations and vision for a robust and well-regulated industry in China."

Avon Products (China) Co. Ltd.
Avon began its operations in China in 1990. We have 74 branches, covering 23 provinces, 5 autonomous regions and 4 municipalities throughout China, with nearly 2,000 associates in the field. Avon China invested over 40 million USD in its manufacturing facility base in Guangzhou, which started manufacturing in 1998. Avon China brings 600 SKU's to women throughout the country. Our product ranges cover skin care, hair care, make up, personal care, fragrance, accessories, fashion underwear and healthy food. In order to comply with Chinese's law, Avon China shifted to a retail model in 1998, and currently provides products through a network of over 6,000 Beauty Boutiques and more than 1,000 Beauty Counters. And 76% of these boutiques or counters are owned by independent female entrepreneurs.

On April 8th, 2005, China's Ministry of Commerce and the State Administration for Industry and Commerce officially approved Avon Products (China) Co., Ltd. to be the first company to test direct selling in Beijing, Tianjin, and Guangdong Provinces.

On March 2, 2006, Avon confirms it has received official notification from the Ministry Of Commerce on being granted the First Direct Selling Business License in China.

 

For further information: MEDIA CONTACTS: Victor Beaudet (212) 282-5344 Sharon Samuel (212) 282-5322 INVESTOR CONTACTS: Renee Johansen Rob Foresti (212) 282-5320

 
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