AVON POLAND: EXAMPLE OF SUCCESS

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TAGS: ECON ETRD EINV PL

SUBJECT: AVON POLAND: EXAMPLE OF SUCCESS

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SENSTIIVE BUT UNCLASSIFIED

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SUMMARY
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1. (SBU) Avon Cosmetics Poland is a proven success story of American
investment in Poland. Avon began operations in Poland in 1992 and
in 15 years has expanded to include Avon's largest manufacturing
facility in the world, 11 representative support centers, and more
than 250,000 direct sales representatives. Avon, proud to be "the
company for women," has empowered women by offering them a solid
career in a changing economy. Econ Counselor and Econ Intern
visited Avon's factory at Garwolin, which includes over 100
production lines and 70,000 square meters of warehouse space. Avon
plans to continue to grow with the Polish economy and will move its
R&D facility from New York to Poland in the near future.

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Background
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2. (U) Avon Cosmetics Poland opened in Poland in 1992. Since then
it has become the leader in cosmetic sales and other related
products in the Polish market. Distribution of Avon products is
based on direct sales by Avon Representatives and, since 2001,
ordering via the internet. An Avon office in Warsaw handles sales,
customer service, finance, and marketing for Poland as well as
Central and Eastern Europe. Avon has representative support centers
in 11 major cities of Poland.


3. (U) In 1997, Avon established a manufacturing plant, Avon
Operations Poland, in the city of Garwolin, 50 kilometers from
Warsaw. The factory started as a 6600 square meter facility. Now
there are more than 100 production lines running 24 hours a day, and
approximately 70,000 square meters of warehouse space. In addition
to the production and distribution areas, the Garwolin factory
contains customs, order assembly space, and a massive warehouse for
storage. Avon Operations Poland is one of the largest and most
modern cosmetics factories in Europe. It is also the largest Avon
facility of the 16 Avon plants located around the world.


4. (U) In 2002, Avon developed a center for Avon representatives
where they are able to pick up products instead of waiting for an
order. Additionally, in 2004, a regional testing center was
established.

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Production
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5. (U) Avon Operations Poland produces 400 million tons of cosmetics
annually at the Garwolin factory. Each Avon factory produces
different products, giving them the advantage to specialize and
exchange with each other. Avon Operations Poland manufactures 1000
different products, specializing in skin care, color cosmetics and
beauty cosmetics. Avon Poland's output is 60-70 percent higher than
any other Avon factory. During the busiest seasons, like Christmas,
Avon Poland operates all of its 100 production lines 24 hours a
day.

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Export
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6. (U) The Garwolin facility has become the largest exporter of
cosmetics in Poland, exporting to more than 50 countries around the
world. Out of the goods that Avon Operations produces, only 12-15
percent enters the Polish market, while the remainder is exported.
Because of this, the facility also has the largest postal service in
Poland which makes it is easy to accommodate the 10 million clients
they serve.

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Employment
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7. (U) Avon Operations employs around 3500-4500 people in its
factory, depending on the season, and Avon's Warsaw office employs
an additional 1500. Avon Operations is the leading employer in
Garwolin, reducing the local unemployment rate from 30 to 6 percent.
Due to the constant expansion, and high employee turnover rate, the
Avon facility recently started looking for labor outside of
Garwolin. About 8 percent of factory workers are engineers, while
90 percent of employees in the Avon's Warsaw office are engineers or
finished some higher education. In addition to Avon factory and
office employees, there are more than 250,000 self-employed
representatives selling Avon products in Poland.


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Empowering Women
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8. (U) Avon Cosmetics Polska is a self proclaimed "company for
women," having worked to make its name synonymous with women and
female empowerment. As one of the largest cosmetic companies in
Poland, Avon gives Polish women a chance for professional employment
in a country where such involvement in the workforce is not
encouraged.


9. (U) Avon Cosmetics Polska is heavily involved in women's
initiatives; its largest campaign for women is "The Great Campaign
for Life." It focuses on raising awareness and funds for breast
cancer. Since the program was launched in 1998, "The Great Campaign
for Life" has raised over PLN 7 million ($2.5 million) to fight
breast cancer.


10. (U) In 2000 a contest titled "Women of Enterprise" was
introduced. The contest was aimed at supporting women in the
professional working environment in Poland, and the idea was to
reward a woman that runs her own company. Although originally a
Polish campaign, it is now supported by the EU. Much of the funding
that Avon receives for these projects are from products that are
sold without commission, charity balls, and or festivals "Open Days"
that focus on raising awareness of breast cancer.

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Future Expansion
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11. (SBU) Ever since Avon's beginning in 1992, Avon Poland has been
growing at a significant rate. Avon plans to move the Avon
laboratory, currently in New York, to Poland. The work of the
laboratory will include research and development and the invention
of new products.

ASHE