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Retail Development Key to Cosmetics Growth in China
Posted: August 30, 2006
Distribution of cosmetics and toiletries in China, 2005
In addition, the expansion of these modern channels has helped consolidate the distribution network, and provide relative ease for the top brands to further their national expansion. Manufacturers are also able to liaise directly with these chained retailers rather than going through third-party wholesalers and distributors, thus losing control over their brand image and product positioning.
The lifting of the ban on direct sales in China was a much-anticipated event in 2005, with most players taking a conservative, wait-and-see attitude. Most players indicated that lifting the ban would have a limited impact on overall sales in the short term. This is because key direct sales players Amway, Avon and Mary Kay, as well as the emerging NuSkin, have been able to build strong sales performances through their single-layer direct sales model. This entails their direct sales personnel being tied directly to the specialist retail outlet, rather than the traditional model of selling door-to-door, that is commonly used worldwide.