雅芳中国战略分析英文版.docx

雅芳中国战略分析英文版.docx

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雅芳中国战略分析英文版

Avon（China）StrategicAnalysis

I.Introduction

1.Overview

Avon,foundedin1886inNewYork,theUSA.Atpresentithavedirectlyinvestedin45countriesandregions,withmorethan300millionindependentsalesrepresentativeandoperationsin137countriesandregions,withannualsalesof5.2billiondollars.Morethan20,000kindsofproductsavailable,suchasskincareproducts,cosmetics,personalcareproducts,incensegoods,modernjewelry,femaleunderwear/fashionclothes,healthfood,etc.Itisthelargest500enterprisesofAmerica.

Sincethebeginningof1990,AvonbringitshistoricalmissionandculturetoChina,committingtoshapingauniquebeautyfortheChinesewomen,forthemajorityofChinesewomenopenedthedoortotheircareer.Morethan10years,ChinaAvonhassuccessfulbuiltshopsaroundthenationalsalesnetwork-74branchoffices,nearly6,000salesandserviceoutletsandabout700beautycounters,whicharegivingChinesewomenfrom23provinces,fiveautonomousregionsandfourmunicipalitieshigh-qualityproductsandservices.

2.DevelopmentProcess

January23,1990,Avoninvest27.95milliondollars,joinGuangzhouCosmeticsCompanytosetup“Sino-USjointventure·GuangzhouAvonCo.,Ltd.”

November14,1990,AvonputintooperationinChina.

June15,1998,theoriginalapproachtodirectsalesmainlyofAvonbecomeChina'sfirstapprovalfromthegovernmentrestructuringofenterprises,introductionofthewholesale,retailsalesofproducts.InSeptember,AvonhasbecomethefirstStateoftheMinistryofForeignTradeandEconomicCooperationapprovedbytheshopandemployingasalesmansellingaproductofthesystemofenterprises.

November1998,Avoninvested43milliondollars,inGuangzhouConghuaTaipingIndustrialZonetobuildaproductionbaseofficiallyputintooperation.

May1999,"GuangzhouAvonCo.,Ltd."changeditsnameto“Avon（China）Ltd.”

May1998,AvonsetupaspecialcounterinDongguan;March1999,thefirstAvonProductsstorewasestablishedinGuangzhou;October2000,Avon'sfirstflagshipstorewasestablishedinBeijingDongfangPlaza;in2002,thefirstconceptbatchofAvonShopsinBeijing,ShanghaiandGuangzhouwascompleted.

November2000,Avon（China）begansellingproductsonline.

March2,2006,Avon（China）Co.,Ltd.officiallyannouncedbythestateDepartmentofCommerceawardedthefirstdomesticdirectsalesbusinesslicense.April3,2006,Avon（China）Co.,Ltd.announced:

Launchanationwideconsumeradvisoryservicesactivitiestopromoteitsfullsuccessofthepilotsingle-layerdirectsalesmodel.

Ⅱ.TheExternalEnvironmentAnalysis

1.GeneralEnvironment

（1）DemographicSegment

Chinaisabigcountrywith1.3billionpeople,48.47percentofthemarewomen.Itissuchabigmarket!

Fromtheperspectiveofagestructure,thepopulationaged15-59is897.42million,accountingfor68.70percentofthetotalpopulation,fromtheperspectiveofgeographicandincomedistribution,generallyspeaking,peopleindenselypopulatedareashavehigherincome,sotheirconsumptiondesireandconsumptionlevelsarehigher.

（2）PoliticalSegment

Chinaisacountry,thatisamongthechangesintheruleofmantotheruleoflaw,andwhoselegalsystemisimproving.Thenationactivelyincreasetheintensitytocombatimitations,reducetheadministrativemeanstoregulatingtheeconomy,mainlyusingmarketregulation,andactivelypromoteprivatization,foreigninvestorsarewelcomed.Besides,regionalprotectionismisgraduallyreduced,openingattitudecanattractforeigninvestment,andalsobymeansofpreferentialtaxpolicies.Theintensityofbarriersisgraduallyreducedandeveneliminate.Intheareaofindustry,thenationmakesgreateffortstoregulatethequalityofcosmetics.

（3）EconomicSegment

SincejoiningtheWTO,China'smarketismoreandmoreopen,andonaglobalscaleChinahasachievedremarkableresults.Double-digitGDPgrowthforseveraldecades,substantialforeignexchangereservesincreasedyearbyyear,atthesametime,theinflationrateismaintainedatacontrollablerange,ithastosayisamiracle!

SincetheexchangeratereforminJuly2005,Recurrentitemisreleased,andeconomicexchangeisenhanced.Economictake-offcreatesanumberofwell-educated,highlevelsofconsumptiongroups.

Itisaverygoodopportunityforcosmeticcompany.

（4）Social-culturalSegment

Chinahasalargenumberofpopulations,sotherearelargedifferencesinquality.IntheeveryadministrativeRegion,the"sub-culture"isexisted;asaresult,manythingsarecompletelydifferent,suchascultural,lifestyles,values,aestheticstandardsandspendinghabits.

Womenareemotionalanimals;theyareoftenindulginginatmosphereanddetailswhichcannotsaydirectly.Chinesewomenenjoyelegantandpursueoffashion,thekindofcosmeticofskin-conservationistheirfavorite.

（5）TechnologicalSegment

Continuousdevelopmentofbiotechnologyandaccelerationofinformationtechnologymakethestudyofskinandcolorimprovebetterandbetter.ConditioningmethodsofChinesemedicinehavearousedtheattentionofforeignresearchersandtheyevenusethem.

Allthesesituationsmaketheindustryofcosmeticadifferentiation:

betterorworse.

2.IndustryEnvironment（Five-ForceAnalysis）

（1）ThreatsofNewEntrants

Inthehigh-endmarket:

generallyspeaking,alarge-scaleofcapitalisnecessity,itisalsoahighinputinsalesandresearch.Thehighinputinsalesresultsofahighermarketshareandmaybeafamousbrand.Greatinvestmentinresearchanddevelopmentcanmakeproductsdifferent,andofcourseupgradeextensionorvalue-addedproducts.Itissuchahighbarrierforpotentialcompetitorstoenterinthemarket.

Inthelow-endmarket:

theenterprisesonthismarketneedlesscapitalinvestment,andtheyhavesimilarproducts.Entrybarrierislower,forpotentialcompetitorsitiseasiertoaccesstothismarket.Inthefuture,biological,chemical,beautysalonsmaybetherightdirections.

Withtherequestsofpeople'sattitudetohealthareincreasing,peoplepaymoreattentiontoqualityofthecosmeticsproducts.Asaresult,somepharmaceuticalcompaniesbegantoentercosmeticsindustry,becausetheirbiotechnologyresearchcanbeappliedintheresearchanddevelopmentofcosmetics,whichwillformthecorecompetence.TheChineseherbalmedicinecosmetic,whichismixedwiththeessenceofChineseherbalmedicine,isacombinationoftraditionalandmodern.Thatwillopenupnewmarketterritories.ThecompanieswhichsuccessfullytransformedfrompharmaceuticalcompaniestocosmeticscompaniesareMentholatum,TJOYandsoon.

（2）BargainingPowerofSuppliers

Thesuppliesarescattered,andtheydon’tprovidealargenumberofrawmaterials,asaresult,theirbargainingpowerisweak.Thenewmaterialsforcosmetics,whichmainlyarebiologicalpreparation,biologicalactivityofextracts,naturalplantadditives,isstilltheleadingproductdevelopmentandhigh-techsymbolofthedirectionofthemainstream.

（3）BargainingPowerofBuyers

Consumergroupsaregrowingdaybyday,multi-levelconsumptionpatternshavebasicallyformed.Consumptionontheconceptofcosmetichasbeenchanging,whichhasmadeconsumergroupsincreaselargely,growingfromthepastlimitedtoyoungwomentoyoungandmiddle-agedmen,andevensomeyoungpeopleandinfantsarealsousethem.Consumergroupscontinuetoexpand,whichnotonlychangedtheformofcosmeticsformanyyearstheconsumptionpatterns,butalsopromotetheruralcosmeticsmarket,particularlythelow-endcosmeticsmarket,youngwomeninruralareasarefondofthesethings.

Brandeffectonthemarketisincreasing.Residents'consumptionlevelandconsumptiongradearealsoelevatingyearbyyear.Judgingfromthecosmeticssalesunderthecurrentmarketsituation,high-grade,goodqualityandgoodhealthwithoutthesideeffectsofChina-madefamous-brandcosmetics,Sino-foreignjointventuresbrandcosmetics,theeffectofimportedbrandcosmeticsinthemindsofconsumersincreasinglyshow,thevalueofsalespromotedupsharply,andhavedominatedthecurrentmarketasthemaingrowthpoints.Inparticular,thecosmetics,whichcandelayskinagingandpreventwrinklesappear,promotebloodcirculationtomaintaintheskinvigorandvitality,whosequalityisguaranteed,priceisrelativelymoderate,aremostconsumers'favorite,andonthecontrary,theproductsthatarelow-grade,poor-qualityonthemarkethavenocustomers,andwillbesiftedoutbythemarket.

（4）ThreatsofSubstituteProducts

Temporarily,cosmeticshavenoalternativegoods,butinsidetheindustry,betweenkindsofbrand,ithassubstitutioneffect.DIYisnowquitehot,peoplerespectfornatureandkeenonDIYtocarryoutmaintenance.

（5）RivalryamongCompetingFirminIndustry

①ExistingCompetitorsAnalysis

CurrentlyinChina'scosmeticsmarket,thereareover3,000brands,largelyinhigh-endmarket;foreignjointventurescompaniesoccupiednearly80percentofthemarketshare.Severalinternationalgiants,suchasL'Oreal,Procter&Gamble,Shiseido,Avon,haveformedapowerfuloligopolycompetition,amongwhich,L’Orealhasthelargestmarketshareandthemostpowerful.Theremaininglow-end-market,theprofitisquitescanty,whichisstillcarvedupbythousandsofsmall-sizedandmedium-sizedfirms.However,theinternationalgiantsarecontinuingtoconsolidatethehigh-endmarket,besides,theyhavepowerfullypenetratedtothelow-endmarket.

②TheCostStructureAnalysis

Cosmeticsindustryisascienceandtechnologyindustry,andalsoakindofmodernculture.Intheimpactofthehigh-techwave,thisindustryisalmostafast-changingone.Technologytocosmeticsis