Avon (AVP) CEO Jung on China developments - implications for direct selling in China (1Q05 conf call quotes)

Last week, Avon (ticker: AVP) announced that the Chinese government had officially approved its becoming the first company to test direct selling in China. Here are quotes from Chairman and CEO Andrea Jung on Avon's China strategy during yesterday's Q1 2005 earnings results conference call:

On testing direct selling in China

….We also believe that the test gives us a first mover advantage

….excited about….being the first company, but let me just remind everybody, this is very small test….It is not going to have any immediate business impact in 2005.

….it is limited to a couple of cities and it's limited in the number of people we can actually recruit. So this is more in my mind for really establishing a partnership with the Chinese government, to really model out a single level model, that understands the requirements of the forthcoming regs.

So the number one, two, and three commitment in 2005 is the continued commitment to our 6,000-plus beauty boutique owners and 1700 beauty counter businesses.

….and this retail wholesale model….I think the beauty of the China strategy is that there is a hybrid of both, so I mean strategically de facto because of the governments ban on direct selling in 1998 we have an unusual hybrid model opportunity with an infrastructure of counters and beauty boutiques….

So while we're conducting this test, we are going to continue to support ever more….with heavy investments in advertising and product innovation this year as well as investments in manufacturing, and I.T.

(Quotes are from the CCBN StreetEvents transcript.)