Avon looks to Asia for growth as it partners with major Korean manufacturer

By

Barbara Santamaria

Published
Jan 8, 2019

Avon has signed an agreement to sell its Beauty manufacturing operation in Guangzhou, China to a subsidiary of major South Korean consumer goods and beauty company, LG Household & Health Care.

Additionally, the companies have entered into a second agreement, announcing that LG Household & Health Care will continue to manufacture products for Avon’s Chinese business and other Asian markets at the Guangzhou factory.

The move is part of a strategic shift that will see Avon try to increase its competitiveness in Asia through partnerships with well-established local companies. Recently, the London-based cosmetics company also revealed a tie-up with a Korean skincare manufacturer to tap into the K-beauty trend.

"This transaction is a significant step forward in our efforts to 'Open Up Avon' by operating more efficiently, with a leaner, more agile global infrastructure,” commented Avon CEO Jan Zijderveld.

“This agreement provides us with greater operational and financial flexibility, while allowing us to benefit from the local knowledge, world-class products, R&D expertise and infrastructure of internationally-recognized partners such as LG H&H. By operating with a local structure that fits our purpose, we will be better positioned to capture the significant opportunity in China and the wider Asian market.”

Suk Cha, CEO of LG Household & Health Care, added, "We are pleased to have reached this agreement with Avon and add a state-of-the-art facility with powerful capabilities to deliver quality products for the fast-growth local market. Our past interactions with Avon provide us a sound understanding of its brand power and global reach, and we look forward to continuing our relationship with Avon as we both explore ways to grow our product lines, bring desirable products to market faster, and each accelerate our growth across Asia."

The transaction is expected to close by February.