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Shisheido in China

Market Study: Shiseido in China

Shiseido is one of Japan’s largest cosmetics manufacturer that has been in operation for centuries. With strong growth in domestic and international markets, particularly in emerging countries such as China, the development of the cosmetics industry is becoming more promising. In its medium-term management program, Shiseido in China is proposing every year a new strategy, the company has set the goal of being one of the most famous company in its industry, to be seen as the biggest actor in the Asian scene.

Overview of Shiseido in China

Shiseido is one of the largest cosmetic companies in the world, it enters the Chinese march in 1981 and built Aupres, which is a great brand of cosmetics especially created for Chinese women. The Japanese company has a very strong interest in international expansion, however, its first investments were lost during World War II. Later, the firm tried to set up businesses in Europe and North America but was quickly dampened by unusual market conditions different than those in Japan. Today, Shiseido, still has a great success in China market by focusing on local brands such as Aupres brand.

Domestically, Shiseido does not meet the growing demand for cosmetic products at lower prices, and, therefore, its revenue continues to drop. The cosmetic markets in China are in a constant raise. The Chinese market increased by around 10% to 2.27 billion yen. With the increase in the population of China’s middle class, the country will soon surpass Japan to become the second largest cosmetics market after the US.

However, the rapid growth does not necessarily mean huge profits for Shiseido. Previously, China has asked for a third party regarding the operating system of the company, this was partly caused by the anti-Japanese demonstrations period in autumn 2012. Indeed, the biggest brand of the firm such as Aqua Label has been removed from pharmacy shelves and replaced by products such as Estée Lauder and L’Oréal. Shiseido has not been able to recover all its lost. The group’s operating profit in China for the exercise of March 2013 has only reached 5 billion yen, a decrease in sales of 60%  over the year.

Shiseido strategies in China

Shiseido in China
Source: Regina Chow

Since its entry in 1981, Shiseido in China has developed a specific strategy to compete with the western brands in the market. The main advantage of Shiseido is the power of its own brand identity, indeed, it invests more on the expansion of its own brand than in the development of its local brands such as Urara and Aupres.

As part of its new strategy, the Japanese cosmetics maker Shiseido has set specific targets to double its sales in China, making an investment in operations and e-commerce in the world’s second-largest economy, seeking to make up larger market shares in China.

Shiseido has set itself a target of increasing overall sales of at least a third to 1 billion yen in 2020. So, sales in China are expected to increase by about 200 billion yen or about twice the amount of the last fiscal year. Sales in stores in China will rise to 5-10 %, and e-commerce platform is considered a new way to achieve his goal. Shiseido also plans to create other products in China to reduce its stocks and enhance its brand ambassadors in the country. The brand is about to become a mega global brand within Asia and other emerging markets.

E-commerce initiatives

With the number of Internet users, which continues to grow worldwide, Shiseido will deploy its efforts to introduce full-fledged e-commerce initiatives for the Chinese market, to achieve its new frontier Strategy. The aim is to develop the different points of contact with new customers, in addition to already existing sales channels in China, given that China has been classified as the country with the most Internet users in 2014. Shiseido launches a website for its brand pure & Mild Soi, a new series of products created especially for the Chinese. This new range of products with environmental features that include packaging made from organic paper has the intention to reach young consumers who preferred natural products.

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