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Rebuilding in Double Time

By: Karen A. Newman
Posted: September 5, 2008
Shinzo Maeda

Shiseido President Shinzo Maeda

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The reorganization reduced overlapping business and clarifyed uncompetitive brands and lines. The R&D division, seen by Maeda as the source of value in product creation efforts, brought together the Research Center and the Institute of Beauty Sciences, establishing the Beauty Solutions Development Center, and changed to a system that sees products and beauty methods develop together.

To the plan’s second strategy, accelerate expansion of Shiseido’s China business, further progress has come in positioning China as the symbol of Shiseido’s growth and advancement. At department stores, money was spent on the exclusive China brand, Aupres, and global lines under Shiseido to update sales counters, advertising and sales promotion—resulting in significant increases in sales of these brands. “In the voluntary chain store channel, we aggressively developed our operations by executing contracts with more than 1,000 cosmetic specialty stores, as planned,” said Maeda.

China and Beyond

China holds great interest for Shiseido that extends well beyond R&D. The Chinese market has been growing at a rapid pace since the 1990s, and this year, according to Maeda, total cosmetic sales in China were about 96 billion yuan, or about 12 billion U.S. dollars. With exchange rates taken in consideration, cosmetic sales in Japan are slightly over 100 billion yuan, or about 13 billion U.S. dollars. “The market is very close to Japan in size, and we think it will soon overtake Japan,” said Maeda. “The Chinese market is a driver of Shiseido’s growth.

“In November 2005, as part of our efforts to improve the infrastructure supporting the brand- and channel-specific strategies in China, we strengthened the R&D functions of Shiseido China Research Center by establishing a new facility approximately 3000 meters in area,” said Maeda. The new research center is 10 times larger than the previous facility. Research to develop products for the Chinese market goes on there, and the center is responsible for “conveying new beauty value to the rest of the world through research on Chinese medicine,” which is gaining increasing global attention.