Shiseido consolidates US businesses

By Guy Montague-Jones

- Last updated on GMT

Related tags: Better, Corporation, Shiseido

Shiseido is consolidating its US businesses in an attempt to
improve efficiency and allow better strategic investment beyond
subsidiary boundaries.

The plans will bring Shiseido Cosmetics, Nars Cosmetics and ZIC Corporation under the umbrella of Shiseido International Corporation, which will be renamed Shiseido Americas Corporation (SAC). The former subsidiaries will become divisions of SAC and their existing CEO's will take up the reins of the new divisions. Improving competitiveness​ Japan-based Shiseido said the move will increase the competitive strength of the group and help it develop a stronger presence in the US. One of the principle advantages of the consolidation will be the efficiency gains achieved through the integration of the businesses. Cuts in back office spending will help improve profitability and free up resources for sales expansion. The company said the consolidation would also enable it to make timely and efficient investments beyond the narrow confines of subsidiary frameworks. Structural reform project​ The US shake-up is part of a wider three year structural reform project that Shiseido is starting this year in order to become a 'global player that is representative of Asia with its origins in Japan'. Last week, the company announced its withdrawal from the world of fashion and accessories to focus on its activities in the cosmetics industry. Shiseido seems to be slimming down and concentrating on its strongest assets in order to achieve higher sales and profits. In this vein, the company also announced earlier in the year cuts in the number of its products by 30 per cent and renewed focus 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. Although this strategy is about creating a leaner and more efficient company, selective expansion is not entirely out of the equation. To better serve the fast growing South East Asian markets, Shiseido is opening a $38m (€24.4m) plant in Vietnam. By shifting its focus from stagnating markets to promising emerging ones while pushing its leading brands, the company hopes to pave the way for higher growth in the coming years.

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