Cosmetics Daily Chemical industry lifts merger and acquisition tide L'Oreal sword refers to Avon

Recently, the capital of the global daily chemical industry has been surging. Since Ding Jiayi was acquired by Cote, the global perfume boss, “marriage” has come true, Unilever will soon be welcoming the world’s beauty salon ancestor Ya Tao, P&G intends to win the German chemical giant Baiersdorf, L'Oréal’s $19 billion acquisition of Avon, etc. Big rumors have also risen one after another.

Industry insiders predict that if these three acquisitions can be successful, the global daily chemical industry will reshuffle, Procter & Gamble, Unilever, L'Oreal or into full swing.

As the earliest company to obtain direct sales licenses in China, Avon was taken over by the French cosmetics giant L'Oréal. Although the two giants are currently not responding positively to the rumor, during this period, the trend of Avon's divergent prices and the recent frequent changes in L'Oréal's senior personnel seem to have made people see a mystery.

Avon agents: mergers and acquisitions are not groundless In May 2010, former general manager of Avon South Latino Odonez "airborne" China, replacing the "brick door" protagonist Gao Shoukang. Odonoz, who took over the hot potato, said that he plans to complete the full-scale transformation of the Chinese market from the summer of 2010 to the first half of 2011. At the same time, L'Oréal throws gold's $19 billion "avalanche" Avon news in the industry. Stimulated by this news, Avon's share price has risen more than 10% for two consecutive days.

In the end is a transformation, or is it acquired? The media have telephoned the two giant companies to verify their claims, but they have not received any positive response so far. The reporter also tried several times to call the Avon (China) national media manager's mobile phone, because the other party transferred to the secretary desk and could not get in touch.

Zheng Jing, a large-scale agent of Avon who has worked closely with Avon (China) for nearly 5 years in Avon, told reporters: "This incident is not rumored."

According to Zheng Jing, at present, the two large companies are negotiating on the acquisition. The key is to look at whether they can be negotiated and talk about the time required. “As an international big event, even if the acquisition is not a matter of time, it may take at least two or three years. But as long as Avon (China) exists for one day, the news will not be revealed because there is no leader. Telling subordinates or the public in advance, I will sell the company to others or be acquired by others. Only when the mergers and acquisitions are really successful will the relevant news come out and be announced to the public through press conferences.”

In addition to acting as an Avon brand, Zheng Jing is the president of a large children's clothing company. He told reporters that his company has gradually withdrawn from the agency relationship with the Avon brand. “Now, because the development of the incident is still unclear and has strong uncertainties, it has already shrunk the Avon brand frontline month by month.” He admitted that operating Avon was not a bad situation until the full-scale direct sales transformation. However, since the hybrid business model was changed, many dealers in China, including themselves, have basically not been able to make money. "Some dealers who make money are likely to be using the Avon brand to develop their own businesses, such as beauty shops. Now, many dealers have chosen to establish a separate portal."

Avon China is not satisfied with soil and water?

With the hybrid business model of "stores and direct sellers," Avon won China's first direct sales license in 2006. The incident had a great impact on the direct selling industry. At that time, direct marketing experts commented that the experience accumulated during the pilot period of Avon might become an important reference standard that the entire industry can use for reference.

However, what almost everyone did not expect was that it was this parallel development model that made Avon miserable in China. Since 2007, sales of Avon (China) have been in negative growth. "Avon has already fallen into the trap of his own knitting."

In order to reverse the decline, Avon executives have been trying to transition to full-scale direct sales in the past two years. However, how to deal with the 6,000 franchised stores opened in China with hundreds of millions of dollars has become their most difficult problem.

In order to achieve performance, Avon will not hesitate to break the arm. Avon Global CEO Zhong Binyu announced that Avon will abandon its retail stores and return its business model in the future to direct sales in China. However, because of the interests of many franchisees, the road to transformation is very difficult. In June last year, Avon (China) continued its contract with 6,000 franchise stores on schedule.

According to media reports, after the renewal of the contract, the development of the incident did not improve. Part of the new contract was referred to by the dealer as a bully clause, which caused them to be strongly dissatisfied. A dealer said that Avon said that if the dealer does not sign the contract to join, it will become a "black shop", after the return will be nowhere, causing anger. Suddenly, Avon and the franchisees are using each other, creating a chaos in the channel, and the Avon brand image has been hit hard.

In July last year, Avon took the lead in launching new models for direct sales in Shanghai, Shenzhen, and Yinchuan. Avon said that in view of the fact that the direct sales market is still doing well, direct sales stores and retail-based franchise stores, which are mainly direct sales, will all be converted to full direct sales in phases. As soon as this was done, pilot city franchisees opposed it.

Avon is caught in a dilemma. Avon (China)’s top management has not been able to find a solution to the problem. In 2010, Avon Financial reported a loss of US$10.8 million in China, which was regarded as the most intuitive manifestation of Avon’s failure in transition.

A senior direct selling source told reporters: "The two legs walk at the same time can easily lead to internal friction. Avon's franchise stores and direct sellers sell the same products. They are really two different kinds of purchase cost and discount systems, and franchise stores and direct sellers. The selling prices in the retail market are different, and some of the direct sellers' online sales are even cheaper than franchise stores, and it is difficult to balance the interests between the two parties."

Zheng Jing frankly stated: “At present, Avon has nearly 80 branch offices, more than 6,000 service outlets and hundreds of thousands of direct sellers in China. The data seems very optimistic. It is actually not the case. A few years ago, the sales of Chinese companies The amount had accounted for 2.6% of the global group's total, and it has now fallen to 0.3%. Except for the factors of market competition, the Avon sales model is obviously not suitable for China's national conditions, and Avon executives have not You can think of a more flexible way to operate."

Qin Yongnan, former director of the Institute of Management Sciences at the China Economic System Reform Research Association and expert of the Commercial Culture Research Center of the China Business Culture Research Association, stated that “composite marketing is a combination of two or more marketing methods and their elements. A marketing system and a sales approach that enables different marketing methods and elements to work together.I think this is a trend in the future development of the direct selling industry.After a full transition to direct sales, Avon tried to take the path of compound marketing, but Because the relationship between marketing elements was not well handled, two legs walked at the same time, but the pace and pace were different, which led to a setback in the operation; after the decision to transform into a full-scale direct sales, they did not take care of the interests of the distributors and eventually led to the transformation. unsuccessful."

L'Oreal: Expanding Direct Selling Swords China and Avon's 20-year rough road in China is very different. L'Oréal has been in the Chinese market since 1997. The development trend has been good. 19 famous brands from Lancome to Maybelline constitute the pyramid of L'Oreal Chinese brand strategy. .

Industry sources told reporters that L'Oreal products have been sold through department stores, supermarkets, pharmacies, and duty-free shops, but they lack a direct sales channel. The acquisition is likely to hope to use Avon to fill the gap in the direct sales channel.

Zheng Jing said that the direct sales model is lower than the traditional cost of sales and has a quick return. Moreover, Avon has deep roots in markets such as Asia and Latin America. It is very interested in the cosmetics retail industry and loves L'Oréal in these markets. Avon is undoubtedly a "better" acquisition target.

Foreign analysts believe that Avon’s net debt ratio is low, and holding a considerable portion of shares of French pharmaceutical company Sanofi Aventis will give L'Oreal an appetite.

Avon’s latest third quarter financial report last year reported that Avon’s net profit in the third quarter was lower than expected, mainly due to the influence of North American and Asian markets, especially Japan and China, which fell by 30% in the third quarter of the Chinese market. L'Oreal sales increased 5.8% year-on-year, of which Western Europe increased by 1.5% year-on-year, North America's growth was 3.8%, and the Asia Pacific surged 11.5%.

According to European media news, L'Oréal plans to acquire Avon at a premium of US$44/share and over US$19 billion. If the acquisition is successful, it will create the highest record of M&A of direct cosmetics companies.

At present, this rumor has not been officially confirmed by the two major companies. However, it is worth mentioning that L'Oréal frequently conducts high-level personnel changes. In October last year, L'Oréal announced in a high-profile at the French Pavilion at the Shanghai World Expo that the Greek-based Pei Peiqing was the CEO of China and was responsible for brand operations. This is the first time that L'Oréal (China) has undergone the restructuring of its top management team in 13 years. Although Gaipaul, who has served as president and managing director of L'Oreal (China) for 13 years, has continued to serve as president, this personnel change that separates the roles of the president and the CEO is naturally not accidental in the industry. After all, under the leadership of Guy Paul, L'Oreal (China) has achieved rapid sales growth for 13 consecutive years. Some people speculated that this change in personnel seems to have some unexplained connection with the Avon acquisition.

More intriguing is that, a few days ago, L'Oreal also announced that L'Oreal Group CEO Andong will replace Irvine, who is about to retire as the chairman and CEO of L'Oreal Group.

As we all know, these two people are totally different in their attitude towards direct sales. Owen has been opposed to the use of direct sales, that will affect the L'Oreal high-end brand image; and An Gong pay more attention to channels and marketing, he had publicly stated to the media: "L'Oreal does not exclude direct sales."

The Japanese chemical industry has become a three-way match Now, the Japanese chemical giant attracted by Avon is not only the L'Oreal family. Many giant buyers including Unilever have expressed interest in Avon. And many parties will undoubtedly greatly stimulate L'Oreal to accelerate the acquisition process.

Industry insiders predict that if L'Oreal’s acquisition of Avon comes true, at least in China, which has become L'Oréal’s third largest market in the world, and with revenue expected to reach 10 billion in revenue last year, plus Avon’s revenue, L'Oreal is expected to surpass Procter & Gamble and win the top spot in the Chinese cosmetics industry. .

And if this rumors and Unilever is about to greet the world's beauty salon ancestor Ya Tao, P & G intends to win the German chemical giant Baiersdorf and other rumors are true, and all acquisitions are successful, then, Procter & Gamble, Unilever, L'Oreal or will In the future of the global market pattern of the formation of a potent trend.