Why Avery had to withdraw from Asia

0

 

Andy Cooper, VP of Avery’s Office Products Asia Pacific division has told opi.net about the company’s difficult decision to shut up shop in Asia.

 

Avery announced earlier this week that it will close down its OP division operations in Asia, with the exception of Japan, by the middle of this year.

 

Cooper points to a number of factors that forced Avery into taking the decision at the beginning of the year after around a decade of effort spent trying to build up the business in the region.

 

First, in the current economic environment, the company – like virtually everyone else – has been reviewing its operations in an effort to ensure a sustainable business model going forward. The Asian OP division had represented a significant investment over the last few years, but overall had been unable to generate profitable growth. At the end of the day, something had to give and, with the need to preserve cash a top priority, the division was earmarked for immediate wind down.

 

Had the division been returning strong profits, the decision, of course, may well have been different. This just underlines the difficulty that even major global brands have on imposing themselves in certain markets.

 

"While we were doing good business with our major global reseller partners in the region, overall these are markets where consumers are currently satisfied with low-cost alternatives," says Cooper.

 

While Avery’s own brand found success with the multinationals, the company tried to offer a budget alternative with its Unistat brand, but even then it was not possible to compete on price with the local producers, admits Cooper.

 

To Avery’s credit, it developed a very much country-specific marketing strategy, creating local language websites and local customer support.

 

"The markets are highly fragmented," states Cooper. "Global initiatives don’t tend to work."

 

Which meant that supporting individual markets became expensive, with sales volumes ultimately not growing fast enough to justify maintaining these investments.

 

Avery will close its commercial offices in Hong Kong, Singapore, Taiwan and China, as well as the manufacturing plant and distribution centre in Kunshan, China, resulting in the loss of approximately 90 jobs.

 

Avery has said that is will "use its best efforts" to help employees find jobs in other business units, but those that are made redundant will receive a severance package and assistance in line with the company’s policies and in accordance with statutory requirements. Where appropriate, these employees will also be provided with outplacement support.

 

in Japan, Avery has recently set up a new legal entity to support all business operations in the country and OP will be integrated into this. Cooper says that company is currently considering alternative supply chain options to ensure that product is available in Japan.

 

For the other impacted markets, where possible Avery will maintain product supply until March and give consumers access to product software and support through 2009 via websites and customer service hotlines.

 

Resellers, of course, may still wish to stock and sell Avery branded products after March, but they will have to find alternative sources of supply, perhaps via importers in Hong Kong or Singapore, but as of yet this remains unconfirmed.

 

Cooper, who has been running the Asia Pacific division out of Hong Kong for the last four years, refused to speculate on his own future.

 

"My priority right now is to focus 100 percent on our staff and customers – we’ll see what happens after that."