Avon Products China (A)

In April 1998, when the Chinese central government bans all forms of direct selling in China in April 1998, executives at Avon China must decide how to respond. The first direct sales company to enter China after its opening to outsiders, Avon sparked widespread interest in direct selling among the Chinese. Just as Avon is about to complete a new $40 million plant in Guangzhou, however, the government cracks down on local abuses of direct selling by banning all forms of the practice. Avon must decide whether to abandon its traditional business model in the face of these developments.