Shiseido establishes joint venture in Indonesia

By Katie Nichol

- Last updated on GMT

Related tags: Indonesia, Cosmetics

In a move expected to contribute to the further expansion of its business in Indonesia, Japanese cosmetics firm Shiseido has signed a joint venture agreement with local firm PT Sinar Mas Tunggal, part of Indonesian conglomerate Sinar Mas Group.

Located in the Indonesian capital of Jakarta and headed up by representative director Yu Okazawa, PT Shiseido Cosmetics Indonesia will be 65% held by Shiseido and 35% held by Sinar Mas.

Business operations are expected to start in July 2014, Shiseido says, adding that it expects the joint venture creation to have a minimal impact on its consolidated earnings for the fiscal year ending 31 March 2015.

The Japanese cosmetics maker’s direct investment in Indonesia builds on its existing relationship with the Sinar Mas Group, as the latter’s PT Dian Tarunaguna subsidiary has been Shiseido’s distributor in the country since 1994.

“We are truly grateful for the contributions Sinar Mas, the most powerful business partner in Indonesia, has made in developing the Shiseido group brands. With these new joint efforts, we will start a new era of the Shiseido group brands to bring an even stronger value to customers in Indonesia,”​ commented Masahiko Uotani,Shiseido’s President and CEO.

Shiseido to develop prestige and masstige offerings

In terms of future development in the Indonesian market, Shiseido said it would develop its prestige product category, which consists of the Shiseido brand and its higher-end Clé de Peau Beauté brand that launched in Indonesia in 2010 and is sold in prestige department store channels.

Additionally, Shiseido will strengthen marketing efforts for the masstige segment, which it says is the largest cosmetics market zone. and is forecast to maintain strong growth in future. Shiseido is to target this segment with Za, its masstige skin care and make-up brand that targets Asian women in their 20s.

The firm highlights that roughly 60 per cent of Indonesia’s population, which at 224mn in 2012 is the world’s fourth largest, are under the age of 35. In particular, the younger population in urban areas is growing significantly, which is expected to lead to further growth in income and consumption.

Growth in Indonesian cosmetics market

The cosmetics market in Indonesia has been witnessing annual growth of over 10% according to Shiseido, something that is expected to continue in future.

Indeed, market research firm Euromonitor states the improved economic growth in Indonesia in 2012 helped boost beauty and personal care sales in the country. Double-digit growth was seen in most areas within beauty and personal care, with rising disposable incomes encouraging consumers to increase their spending on such products.

Both male and female Indonesians are increasingly concerned with appearance according to Euromonitor, and are trying to look younger and more beautiful due to peer pressure and exposure to beauty advertising featuring celebrity endorsement.

Related topics: Business & Financial

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