This week, Avon announced that an agreement with The Face Shop’s parent company, LG Household & Health Care Ltd, on the sale of its Chinese production. Although Avon receives financial profit from the sale, after the transaction, no significant changes will occur.
Avon beauty products for sale in China and beyond will continue to be produced at the plant in Guangzhou, China, even after selling The Face Shop will be completed and this will take place in February of this year. According to a press release, Avon Products profit will be 44 million dollars.
Describing the strategy of selling, General Director of Avon in China Yang Zijerveld said: “This transaction is a significant step forward in our efforts to promote Avon by effectively working with a more flexible global infrastructure. In addition, this agreement provides us with greater freedom, including financial”.
In addition to the stated $ 44 million, the company hopes to obtain more from the point of view of market analysis and benefits: the agreement, according to Mr. Zijerveld also will allow Avon to benefit from local expertise, world class products, innovations and world-renowned partners, for example, LG H&H.
“Working with local structure, which is consistent with our goal, we will be in a better position to use the significant opportunities in China and the wider Asian market, he Zijerveld. – We know LG H&H and believe that they will remain a strong partner of the Avon, as we collectively strive to develop our business in the region.”
The Face Shop will also increase production capacity at the plant to manufacture products for their own brands of K Beauty. At the moment, the deal looks win-win for both companies: “We are delighted to have reached this agreement with Avon and added modern hardware with powerful capabilities for producing quality products for the rapidly growing local market – says-Suk Cha, CEO of LG Household & Health Care. – Our experience of cooperation with Avon in the past gives us a clear view of its brand influence and coverage of the world market, so we look forward to continuing our relationship with Avon, as both companies are looking for ways to expand our product lines, the rapid output desired products on the market and progress in the Asian market of each of them.”