Companies

Mary Kay quits India citing regulatory issues, poor sales

New Delhi | Updated on July 24, 2013 Published on July 24, 2013

Decision will affect 4,500 distributors of the direct selling company





Direct selling brand Mary Kay India has wound up its Indian operations citing regulatory concerns and poor sales.

Sources close to the development said it was “purely a financial decision”, one that was communicated to its distributors or direct selling agents as early as February.

In its communication to the distributors, Mary Kay Inc said: “We have seen the regulatory environment in India for both direct selling and cosmetics companies dramatically change and change again at an alarming and inconsistent rate, while the country’s infrastructure continues to create insurmountable obstacles. Despite significant investments of time and money, our operation in India has not performed as we had hoped and expected. So, we have made the decision to reallocate the company’s resources to other international markets.”

Mary Kay Inc entered India in 2007 and has invested close to $20 million in its venture. It launched a number of India-specific products and had nearly 100 stock-keeping units in categories such as skincare, fragrances and cosmetics.

The company had earlier told Business Line that it was thinking of setting up a third-party manufacturing facility in Baddi, Himachal Pradesh.

Mary Kay, which has 2.5 million distributors in about 35 markets globally, became famous for offering pink Cadillacs to its top sales persons. In India, it had about 4,500 beauty agents and four third-party warehouses.

WFDSA meet

The World Federation of Direct Selling Associations (WFDSA) is planning to hold its first meeting in India with various stakeholders to address the industry's concerns. The association, which has CEOs of global direct selling companies on its board, will be seeking a separate legislation for the industry in India.

Direct selling health and wellness firm Amway, too, has said lack of clarity on regulatory norms is hitting its business, with growth slowing to about 5-7 per cent this year.

Speaking to Business Line, William S. Pinckney, Managing Director and CEO of Amway India, said: “Despite the fact that FMCG is a relatively buoyant category, we are seeing moderate growth.

“This is largely due to regulatory issues. If the issues are resolved it will be double-digit growth.”

Pinckney also noted that lack of clarity on the definition of direct selling was creating confusion among distributors.

“We were among the first to invest in direct selling, in 1995. You cannot ask companies to come and invest in India and abandon them midway.” bindu.menon@thehindu.co.in

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Published on July 24, 2013
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