"Reaching for the leading cosmetic company in Asia, 1957-2015: the case of Shiseido" ?

"Reaching for the leading cosmetic company in Asia, 1957-2015: the case of Shiseido" ?

　　The pursuit of beauty has been incorporated into human behavior for a long time. As spurred by such human behavior, the culture in Japan, influenced by the Western countries during the Meiji Era, and cosmetic companies appeared at the same time. Women started to purchase goods developed by such companies in order to make themselves attractive, and the company has grown greatly along with a number of consumption by the women. One company representing Japan's cosmetic producer, Shiseido, can be considered a successful company in Asia from the viewpoint of marketing.

　　In fact, Shiseido started its own business as a pharmacy in 1872, and tried to make soda-water and ice cream in 1902. People must be wondering when Shiseido changed its policy at the same time. Actually, it was in 1897 that Shiseido had changed itself into a cosmetic company. More surprisingly, not only Shiseido but whole cosmetic companies in Japan actually lacked involvement with international consolidation, and it was slower to obtain international brand during Showa Era.

Now, Shiseido, one of the leading cosmetic companies, has been encouraging people to pursue their beauty, and it can be said that there are three aspects on its wide stance and success in Asia: the first overseas basis in Taiwan in 1957, analyzing sales composition of cosmetics from 1985-2015, and failure of branding and marketing strategies and challenging. Over all, this report describes how Shiseido has grown in Asian market since the year when it began to build bases in Asia and why it couldn’t make a progress worldwide.

　　First of all, Shiseido started its own business overseas in 1957 in Taiwan and expanded the number of basis afterwards, such as Italy, Singapore, New Zealand, Thailand, and France. As for China, it was in 1981.

In 1957, sales of Shiseido’s cosmetics overseas began in Taiwan for the first time. In fact, importing of cosmetics products was banned in Taiwan at that time, so Shiseido established its own basis locally. Based on local laws and rules like this, it can be said that forming a unique brand was successful in Taiwan. And Shiseido products are still in the process of being popular in Taiwan, and it is respectable situation. There is another reason for success there. Japanese culture went into Taiwan with rapid economic development in Taiwan. Shiseido’s expansion towards Taiwan was a solid foundation for Japanese market entering the South China economic zone. The success or failure of this entry is the future of Japanese companies. It was also in anticipation of the wealthy Taiwanese consumption. The existence of this huge economic zone including Taiwan must have become an event that has great influence on significant growth of Shiseido in Asia.

After that, it began to spread the hospitality of Japan to China through Shiseido's beauty methods. Speaking of China, the population was about 990 million people in 1981, so the economic scale was immeasurable. It was after the time when companies and individuals became easy to do business so that Shiseido expanded its business to China. The reason for putting base in China was because there was an offer from Beijing city, but it was in 1987 when Shiseido raising the level of product. Initially, it launched a brand called "華姿". At that time, it was not so high as to sell in the Shiseido brand yet. According to Shiseido News Release, Shiseido made Shampoo, hair liquid, even products such as skin care and makeup, moreover, brand of "華姿", won many awards in China. Technical cooperation to local factories over the last ten years, their process was quite different from the approaches of other companies in Europe and the US to the Chinese market, and the establishment of time-consuming trust and relationship has become a big cornerstone of the establishment and development of a joint venture later.

Seemingly, the economic strategy of moving to China after Taiwan was the establishment of the Asian market, Taiwan probably was used as a trial basis of brand development in Asia. Either way, it can be said that the order of this development was very calculating.

　　Secondly, analyzing sales of cosmetics and how Shiseido internationalize its brand make it possible to understand how Shiseido was evolving in Asia during 1985-2015. Each area in the world have been paying different attentions towards cosmetic products. For the sake of simplicity, it should be divided into three parts, America, France and Japan. Although it goes without saying that there are various kinds of cosmetic products, if company can identify the products that people are looking for by region of the world, it will be a great success in branding and marketing. Ueno reports that Japanese consumers have preferred skincare products to make-up or perfume. Indeed, the recent marketing of Japanese skincare products toward Asian tourists shows this phenomenon. Contrary to this one, American women have shown their preferences for make-up products and European people seem to have preferred perfume. (880)

Japanese cosmetics companies re-initiated their overseas ventures from Asia in the late 1950s, and implemented a strategy of exporting own brand to globalization in the early 2000s. Surprisingly, Shiseido is currently ranked fifth in the world ranking in total sales of cosmetics, but actually it is only number one in Asia, so Asian strategy is a specialty field. But in Asia, this growth can be said to be "failure in world competition" in a way. Technically, the Japanese cosmetic products company, represented by Shiseido, did not have the know-how to internationalize brands. In short, it means that they have missed the globalization. Furthermore, Japanese cosmetic companies missed the opportunity to acquire international brands and they even lagged behind in becoming an international portfolio of place-based companies. These failures in marketing and branding narrowed their global reach of Japanese cosmetic companies. (“Business Story”)

　　Finally, although Shiseido growing and spreading its bases internationally, it become more flexible for regional rather than global orientation at first, and MEIT’ Asian strategy has given rise to cosmetic companies.

Unfortunately, most Japanese cosmetic firms were slower to get international brands, so Shiseido 's growth remains in Asia. What is the cause of Shiseido's defeat? L'Oreal, ranked first in the global ranking, has had Lancôme, one of the world's leading luxury cosmetics brands, as well as Yves Saint Laurent and makeup artist brand Shu Uemura from Japan by M & A. What should be paid attention to here is M & A. Shiseido is currently doing M & A but it would be better to express that it had missed such an international strategy to the last. Currently, sales of cosmetics industry in department stores are sluggish, competition is intensifying even in online shopping. Conversely, as the introduction of online shopping has enabled consumers to choose products more freely, it is probably a good environment for Shiseido to make more profit from now.

Moreover, METI is promoting Asian strategy because Shiseido lacked involvement in the great industry consolidations of the 1990s and 2000s compared with others. Business History states that in 2010, when METI hoped to promote Japanese cosmetic sectors along with other cultural industries, it graded locations in the world where Japanese firms possibly have a competitive advantage. At that time, METI identified areas, which have distinctive features such as Korea, China, Hong Kong. Japanese companies were recognized as low potential in the US and the EU. (889)

　　In conclusion, Shiseido firstly started to establish its own global basis in Taiwan in 1957. Even though importing cosmetics product was prohibited at that time, Shiseido gradually adapted and introduced local methods. This first advance overseas seemed to succeed but it could not catch up with the world finally. Analyzing demands of each product and Shiseido’s marketing make it possible to notice how Japanese products were week. Indeed, Japanese tend to purchase mainly skincare product. So Shiseido’s how to branding was totally aiming for Japanese people. Moreover, not just Shiseido but whole Japanese cosmetic company belatedly acquired an international portfolio as place-based companies, and they did less M&A compared with foreign major cosmetic companies. This is why this analysis proves that Shiseido missed this important opportunity for advancement of the world.

　　Most Japanese people know about what Shiseido is because they often see its commercial on TV and products on the sale. Seemingly, it can be said it has been succeeding in branding itself in global perspective. But have Shiseido really reached for global? Actually, it is ranked in 5th in the world ranking in total sales of cosmetics. On this point, two opinion would be appear whether this phenomenon should be recognized as a success or failure. Japan is a tiny country and it is not easy to imagine Japanese companies conquer the world, so it must be said that Shiseido’s branding and marketing is successful as one of the leading cosmetic company in Japan. Japanese people must keep their eyes on how Shiseido evolves in near future.

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