Shiseido reveals plan to revive China business

By Michelle Yeomans

- Last updated on GMT

Shiseido reveals plan to revive China business

Related tags Economic growth

After recording a 4.8% drop in sales in China, Shiseido's three year plan focuses on boosting growth, particularly in this market.

Thanks to sustained economic growth and the emergence of a middle class with an increasingly high spending power, China has turned out to be a very important market for Shiseido.

To promote growth, executives say they will re-engineer the business to secure a future of sustained growth, through investment in ‘aggressive marketing’.

“The common strategy points to realize these are ‘Nurture strong brands,’ ‘Bold investment in growth areas,’ and ‘Direct connection between headquarters and the front line’,"​ a company official statement outlined.

The plan will be implemented in the 2015 to 2017 financial years with a view to boost growth in the subsequent 2018 to 2020 financial period.

Accelerated global growth

The continued expansion of the international business has a two-pronged strategy that will focus on the introduction of a new matrix-style organization and a further expansion into travel retail.

The matrix system will see the business divide into four categories, namely prestige, cosmetics, personal care and professional, as well as six specific regions and markets – Japan, China, Asia, EU, the US and travel retail.

The expanded travel retail business will see an investment in cosmetics counters and an expansion of representatives trained to deal with this category, together with a new counter at the third terminal of Narita Tokyo International Airport, catering mainly to Asian tourists.

Reinvesting in the brand and R&D

There will also be further investment in the company's product innovation pipeline that will start with an increased personnel for the company’s research and development team.

Overall, Shiseido proposes a 40% increase in the R&D budget by 2017, pushing the worldwide personnel for that area up from 1,000 to 1,500 by 2020.

Investment in R&D will also see the establishment of a global innovation center in Yokohama, with construction currently mooted for 2018 and will ultimately be the largest facility of its kind in the world.

There will also be a concerted drive in marketing and branding that will result in an additional 100 billion yen spend on marketing over the three year period, further supported by a move to re-invigorate and re-inforce the Shiseido brand identity.

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