Avon Investigates Its Operations In China

Avon Products Inc. announced Monday that it has been investigating its China operations since June after it received an allegation that certain travel, entertainment and other expenses 'may have been improperly incurred.'

The beauty company based in New York said it has disclosed its internal investigation to the Securities and Exchange Commission and the Department of Justice. 'No conclusion can be drawn at this time as to its outcome,' the company said.

Avon spokeswoman Renee Johansen added: 'It's still very early.'

The company's investigation focuses on compliance with the Foreign Corrupt Practices Act, which outlaws bribing foreign officials. Foreign-corruption investigations and prosecutions have increased in recent years, thanks to new anticorruption laws.

In 2006, Avon was granted the first direct-selling license in China after authorities there lifted a ban on the business model that had been in place since 1998. Since then, China has remained a major strategic focus for the company.

In the second quarter, Avon's sales in China totaled $77.7 million, up 20% from a year earlier. Sales representatives rose 36% from a year earlier. Still, the region was the only unprofitable one for Avon in the second quarter, posting a $7.9 million loss.

The investigation comes at a delicate time for the company, which only recently has shown traction from a massive corporate turnaround it began in 2005, led by Chief Executive Andrea Jung. Over the past three years, Avon has slashed management and employee ranks, cut back the clutter of products in its catalogs and poured money into ad spending and sales-representative recruitment.

Avon shares rose 6.6% to $30.86 as of 4 p.m. Monday in composite trading on the New York Stock Exchange. The company had halted trading pending its announcement. Avon is to report its third-quarter earnings next week.

Ellen Byron

雅芳(Avon Products Inc.)周一发表公告称，接到公司的某些旅行、娱乐和其他支出可能存在不当之处的指控后，雅芳6月份以来一直在调查旗下中国业务。

这家总部位于纽约的美容用品公司表示，它已经向美国证券交易委员会(SEC)和司法部(Department of Justice)披露了这项内部调查。雅芳表示，目前还没有得出调查结果。

雅芳发言人约翰森(Renee Johansen)补充称，调查还处在非常初期的阶段。

调查的重点是雅芳是否违反了《反海外腐败法》(Foreign Corrupt Practices Act)，该法律禁止向外国官员提供贿赂。得益于美国新的反腐败法，近年来针对美国企业在海外腐败行为的调查和诉讼不断增加。

中国曾于1998年颁布法令，取缔直销业务模式；但在中国有关部门取消直销禁令后，2006年雅芳获得了中国首张直销许可证。此后中国一直都是雅芳公司的重要战略市场。

今年第二季度，雅芳在中国的销售额总计7,770万美元，较上年同期增长了20%。销售人员较上年同期增加了36%。不过，当季中国却是雅芳唯一没有盈利的市场，亏损了790万美元。

这起调查是雅芳正处于微妙时刻之际展开的，该公司首席执行长钟彬娴(Andrea Jung)于2005年开始实施的大规模扭亏为盈计划刚刚显现成效。过去三年，雅芳大量裁减了管理层和员工，从产品清单中砍去了诸多产品，并投入重金用于广告支出和销售代表招聘。

纽约股市周一收盘时，雅芳股价上涨6.6%，至30.86美元。该股此前停牌等待发布公告。雅芳下周将公布第三财季收益。