LG Household & Health Care – A South Korean Conglomerate with a US MLM Subsidiary


LG Household & Health Care (LG H&H) is an immensely successful South Korean company with a well-known US MLM subsidiary called The Avon Company (this was previously the US entity of the global Avon Products Inc.).

LG H&H is a large manufacturer and distributor of household goods and cosmetics. Based on its success, Cloud MLM ranked it in position 44 of the top 100 MLM companies in the world in 2022.

The company also featured in Forbes list of “Asia’s 200 Best Over A Billion” in 2019, within the cosmetics/ personal care industry.

Read on to see our analysis of the company and find out how it operates.



Section 1 – The Company

LG Household & Healthcare Logo

This section takes an analytical look at LG H&H’s history, management structure, and performance.

What is LG Household & Health Care?

LG H&H is the second largest company after AmorePacific Group in the South Korean cosmetics industry.

The official name of the company is LG Household & Health Care Ltd (LG H&H Co., Ltd or LG H&H). It’s a subsidiary of the massive LG Corp. The company manufactures, markets, and sells household and cosmetic products, as well as beverages.

Moreover, it’s the South Korean bottler for Coca-Cola.

In 2019, LG H&H bought Avon North America (The Avon Company) which is a US multi-level marketing company selling beauty products.

The Avon Company was originally the US entity of Avon Worldwide (Avon Products, Inc.) which split from the global Avon Products in 2016. It was called New Avon, LLC before changing to The Avon Company.

Natura & Co bought the global Avon Products in May 2019.

Market and Revenue

In 2021, LG Household & Health Care had revenues worth $6.6B and made $676M in profits. Currently, 4,469 employees work for the company.

Although based in South Korea, LG H&H has a global presence in the US, Malaysia, Vietnam, China, Japan, Canada, Singapore, Thailand, and the UK.

Over the years, the company has grown rapidly through multiple mergers and acquisitions (M&A) including:

  • a Taiwan subsidiary (LG Household & Health Care (Taiwan), Ltd)
  • a joint venture in Saudi Arabia
  • a local subsidiary of The Face Shop in Guangzhou, China
  • buying Fruits & Passion, a Canadian body and household goods company
  • buying the Singaporean sales subsidiary of The Face Shop
  • buying ‘Everlife,’ a Japanese cosmetics company
  • a joint venture with Diamond Water
  • a joint venture with Haitai Beverage

History

LG H&H was first founded in 1947 as Lucky Chemical Industrial Co. by Koo In-Hwoi (LG Corp’s founder).

It started with the production of Lucky Facial Cream, the first Korean cosmetic product. In 1954, it also launched ‘Lucky Toothpaste,’ Korea’s first toothpaste brand.

By 1960, the company name changed to Lucky Soap, Ltd. At this point, it established the Cho Yeup Plant and produced beauty and detergent soap. Later, the name changed to Lucky Oils and Fats, Ltd. in 1966 and it produced the first Korean synthetic detergent, Hi-Ti New.

In 1974, the company name changed to ‘Lucky Corporation.’

As it grew, the name changed to LG Chemical, Ltd. (LG Chem Ltd. or LG화학in Korean) in 1995, the largest Korean chemical company headquartered in Seoul, South Korea.

Eventually, LG Household & Health Care was established as a spin off from LG Chemical, Ltd. in 2001.

Who are the top executives of LG H&H?

Until recently, Cha Suk-yong was the CEO and Vice Chairman of LG H&H Co., Ltd.

After Cha Suk-yong stepped down in late 2022, LG H&H said Lee Jung-ae would become the new CEO. She was the senior vice president and head of the beverage business.

Other key executives include:

  • Hong-Ki Kim, Chief Financial Officer & Director
  • Seon-Gyu Park, Chief Technology Officer
  • Jun-Sik Han, Head-Legal & Compliance Support
  • Sang-Min Lee, MD & Head-Household Goods Research
  • Yeon-Hee Choi, Managing Director

Who is the owner of LG H&H?

LG H&H is currently listed on the Korean Stock Exchange, making it a public company. It’s a subsidiary of LG Corp which is the largest shareholder with a 34% stake in LG H&H.

Where is the LG H&H headquarters?

LG H&H has its headquarters in South Korea at LG Gwanghwamun Building, 58 Saemunan-ro, Jongro-gu, Seoul, 03184. It has other locations in the US, Japan, Vietnam, Singapore, China, Thailand, Canada, Malaysia, and the UK.

Section 2 – Business Model

Amway business model

In this section, we’ll explore LG H&H’s business model which is closely interlinked with its US MLM subsidiary, The Avon Company.

How does LG H&H market its products?

LG H&H utilizes conventional sales and marketing through its online shopping mall and physical stores.

However, it also sells and markets a selection of its products and the larger LG Corp’s products through the direct marketing and MLM structure of its subsidiary, The Avon Company.

On the other hand, The Avon Company exclusively utilizes direct marketing and multilevel marketing.

How many LG H&H independent representatives are there?

The Avon Company (LG H&H’s MLM entity) doesn’t provide a specific number of its sales representatives.

However, it’s interesting to note that the number of “Avon Ladies” (global Avon Products’ sales representatives) was dropping before LG H&H bought Avon North America from the global Avon Products.

Keep in mind that the global Avon Products Inc. had a massive 6 million representatives worldwide, in 2018.

How do you make money on LG H&H?

LG H&H may not have an incentive program for sales representatives, but it does have an incentivized membership program for its customers. The L-care Members can get the following benefits:

  • subscription gifts
  • purchase benefits
  • a regular 10% discount
  • discounts from other promotions

On the other hand, an independent representative of The Avon Company gets the following benefits:

  • a 25+% discount (based on the order volume) on beauty orders and sales worth $40+
  • a free product worth $37 with your first order
  • a $10 credit for your next campaign order if your first order is $60+
  • up to $1,550 worth of free products after $500 in sales
  • 25-40% discounts on LG electronics, appliances, and tech from LG Partner Stores
  • Avon perks and rewards
  • advanced education opportunities
  • 24/7 telemedicine
  • incentive trips

How much can you make as an LG H&H independent representative?

The Avon Company is a privately held company, unlike the parent company LG H&H. Therefore, it isn’t required to and doesn’t provide public earning disclosures.

However, various third-party sources like Sequence Inc. have revealed the global Avon Products’ 2009 earnings disclosure (before the US Avon split off).

These were the annual Avon Products leadership representatives’ earnings, including commissions, bonuses and profits on personal sales:

  • 4.4% earned $30,000 and above
  • 17.6% earned $12,000 – $29,000
  • 26% earned $7,000 – $11,999
  • 15.8% earned $5,000 – $6,999
  • 36.1% earned 0 – $4,999

How do you sell LG H&H’s products?

Representatives of The Avon Company (LG H&H’s MLM entity) can sell using the following channels:

  • buying Avon products at a discount to resell
  • sharing their online store URL with customers
  • enrolling in the “Find a Representative” feature for customers
  • enrolling in the “Search for an Avon Mentor” feature for representative recruits
  • promoting their Avon business on social media
  • selling in short events

However, direct product sales through online auction sites like eBay and Amazon are prohibited.

How can you become an LG H&H member and US Avon representative?

Four options exist to sign up as an LG H&H L-care Member:

  • register through the L-care Members website
  • register through the L-care Members mobile application
  • sign up through the mobile e-wallet partnership service
  • sign up through a URL text from an LG H&H store

On the other hand, the options to sign up as an Avon representative include:

  • using the name or referral code of the person who invited you when signing-up on the Avon website
  • signing up on the Avon website without an invitation and Avon can assign you a mentor

How much does it cost to be an LG H&H member and US Avon representative?

LG H&H’s L-care Members pay an annual subscription fee of KRW 30,000 (USD 23.87) including VAT.

Avon representatives can join for free and they don’t have any required minimums. But there’s also the option to join by purchasing the $30 “Starter Collection” containing full and sample sizes of bestselling products worth $100+ and product-packed brochures (catalogs). Or simply contribute $5+ to the American Cancer Society.

LG H&H and US Avon’s Compensation Model Explained

LG H&H’s L-care Membership is a simple program whereby members accumulate points when buying products in various LG H&H stores, and thereafter redeem the points for free products.

LG Household & Health-Care compensation planPin

The accumulation rate of the points is the percentage of a product purchase amount that converts into points.

Each point is converted to 1 Won.

Accumulated points cannot be inherited, transferred, provided as collateral even for immediate family members, or refunded in cash. Also, points expire after one year.

US Avon has a more complex MLM system for its Independent Sales Representatives who serve as independent contractors.

Here is an overview of the 2021 compensation plan and path to leadership in the MLM structure.

Avon compensation planPin

In the table, “Campaign” refers to a continuous two-week period when new products are introduced. The term “G” refers to the generation/ level of your downlines.

As illustrated, you move up the ranks based on your total team sales and earn more based on the size of your downlines.

Requirements to be a US Avon Representative (Video)

To qualify as a US Avon representative, you must meet the following requirements:

  • be 18+ years of age
  • live in the US, the District of Columbia, Saipan, or Guam
  • provide your email address
  • establish your account in your legal name
  • provide your contact information including phone number, and mailing and email addresses
  • register for an Avon Wallet account to receive payments, incentives, and rewards
  • provide a social security or ITIN number

How do you quit US Avon?

Either you or US Avon can terminate your representative account.

If you don’t order any products for 6 consecutive “Campaigns” (roughly three months), US Avon will terminate your downlines (you won’t earn team sales from the downlines).

Besides, US Avon can terminate your representative account if you don’t make any order for 26 Campaigns (roughly one year).

Section 3 – LG H&H’s products

LG H&H’s products

This section focuses on LG H&H’s products as well as the products sold by The Avon Company since they are closely interlinked.

What does LG H&H sell?

LG H&H’s extensive collection of products includes:

  • Cosmetics: High-end brands include The History of Whoo, SU:M37, O Hui, and belif. Mid-to-low end brands include Sooryehan, ISA KNOX, The Face Shop, and Beyond.
  • Personal care products: The main brands include Perioe Bamboo Salt (oral care), ON: THE BODY (body care), and Elastine Reen (hair care).
  • Household goods/ home care products: The main products include Jayeonpong (dishwashing detergent), TECH (laundry detergent), and Saffron (fabric softener).
  • Beverages: The main brands include Coca-Cola, Sprite, Fanta, Minute Maid, Georgia, Sunkist, and POWERADE.

Regarding The Avon Company, its portfolio includes skincare, fragrance, color cosmetics, and personal care, health and wellness products. The main brands include ANEW, CHI, belif, Skin So Soft, and The Face Shop. They also have home essentials, fashion, and accessories.

Lawsuits and Independent Reviews of LG H&H and The Avon Company

Avon Products Inc. faced a $100 million lawsuit in 2013 (several years before LG H&H bought the North America unit). The lawsuit claimed that Avon Products deceived customers by falsely advertising its products as cruelty-free, despite using animal testing in China and other countries.

A California federal judge dismissed the class action lawsuit.

Section 4 – FAQs About LG H&H

Amway FAQ

This section covers some questions that you may still have about LG H&H with proven answers to give you a clearer understanding of the company.

Where are LG H&H’s products manufactured?

LG H&H has factories in multiple locations within South Korea, including Seoul, Daejeon, Chungcheongbuk-do, Jeollanam-do, Gangwon-do, Gwangju, Gyeongsangnam-do, Gyeonggi-do, Incheon, and Ulsan.

Is LG H&H or The Avon Company a pyramid scheme?

In an effort to avoid any impression of being a pyramid scheme, Avon Products left the Direct Selling Association (DSA) in 2014 (a few years before LG H&H bought the US Avon entity). They did it citing that the DSA’s bylaws may not properly protect consumers against fraud. Above all, pyramid schemes are illegal in the US; hence, the continued registration of Avon US is an indicator that it passes the regulatory requirements of an MLM – not a pyramid scheme.

Is LG H&H an MLM company?

LG H&H isn’t really an MLM company; however the company’s subsidiary (the US Avon Company) is an MLM through which LG H&H markets some of its products as well as products from the parent LG Corp.

*Sources

Author: Victor Nyorani

Victor Nyorani - Network Marketing Start

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