Shiseido ditches fashion to focus on cosmetics

By Katie Bird

- Last updated on GMT

Related tags Asia

Shiseido is withdrawing from the world of fashion and accessories
in order to focus on cosmetics as part of its bid to become a truly
global player.

This is the second announcement this week from an Asian personal care company expressing plans to significantly increase their slice of the global market, after Korean player Amorepacific expressed its designs on the China market earlier this week.

A focus on cosmetics Shiseido's move focuses on the company's subsidiary The Ginza which has concentrated on retail and wholesale cosmetics sales as well as fashion boutique businesses.

Founded in 1975 the subsidiary currently operates 21 stores, 18 of which will be closed before the end of the 2008 fiscal year.

The three remaining stores will concentrate on cosmetics and the company plans to turn the flagship store into an information centre and marketing vehicle to help spread awareness of the brand, taking advantage of the stores location in one of Tokyo's most prestigious districts.

An increasingly competitive environment and significant changes to the market are the reasons put forward by the company for the change in direction, explaining that the Ginza's business model is no longer unique.

The move is part of a wider three year structural reform project that Shiseido is implementing this year in order to become a 'global player that is representative of Asia with its origins in Japan'.

Earlier this year the company announced plans to cut the number of its products by 30 per cent and to concentrate on a small number of flagship brands.

"The fewer products we have to sell, the more it improves our marketing efficiency.

It also makes it easier to invest and easier to use our research resources," CEO Shinzo Maeda said in a news conference.

In addition to alterations to the product inventory, the company also said it planned to increase the proportion of its revenue made up by international sales including the opening of a $38m (€24.4m) plant in Vietnam to serve the fast growing South East Asian markets.

Asian players challenge global giants Earlier this week Amorepacific Corporation announced plans to expand into China, a move that aims to help it become one of the world's top ten cosmetics companies by 2015.

For the South Korean company this will mean achieving sales of Korean Wan 5 trillion ($4.9bn) and competing with the world's biggest players including L'Oreal, Estee Lauder and Beiersdorf.

"By 2010, we plan to introduce various cosmetics brands in China," said Amorepacific CEO Seo Kyung-Bae, speaking to reporters for Korean national newspapers.

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