Enterprise
Take a leaf out of Shiseido’s books
Behonce Beh 
Counselling and the human touch remain two key touch points for prestige brands like Shiseido to compete globally
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The local cosmetic and beauty products market continues to be marred by a number of unscrupulous manufacturers which produce harmful products.

Every year, the National Pharmaceutical Regulatory Agency under the purview of the Healthy Ministry releases a list of cosmetic products whose registration has been cancelled.

Cosmetics on that list are those found to contain banned ingredients such as controlled poison and its usage could harm the consumer’s well-being.

While the country is not short of quality beauty products by local manufacturers, these unscrupulous ones have dented consumer confidence in made-in-Malaysia goods.

As such, local manufacturers should strive to emulate long-established brands such as Japanese brands, which place great importance on quality.

These Japanese-made products are often backed by scientific research which helps them maintain their staying power in the market even with the rising popularity of Korean skincare products.

 

Competition is unavoidable

Japan-based Shiseido Group CEO and president Masahiko Uotani, who was in town recently, explains that competition is unavoidable and market developments in South Korea have an impact on its global business.

Uotani is the first Shiseido president to be appointed from outside the company’s ranks

“I respect what they (Korean beauty brands) do as they come up with new ideas constantly. From BB cream to CC cream, these products are developed by looking at consumer needs closely while having a shorter development time for products,” he shares.

However, Uotani stresses that Shiseido does not want to emu-late or copy what Korean beauty brands are doing but instead focus on its core strength, which is scientific research.

“Whatever we produce, the fundamental aspect of it should be safety as these are products that you put on your face.

“There should also be a strong sense of function as consumers pay for that when it comes to skincare and they want to see results,” he explains.

Uotani says Shiseido is currently constructing its 7,023 sq m Global Innovation Centre (GIC) in Yokohama, Japan.

The GIC, which is expected to cost over ¥30 bil (RM1.1 bil) will serve as the company’s new global innovation hub for research and development (R&D) around the world, and is expected to be operational by the end of next year.

 

Personal care brands still matter

Mass-market personal care products still play a big role for Shiseido in terms of reaching out to developing nations across Asia.

Sales of Shiseido personal care brands in the Asia-Pacific rose 10.3% in the first six months of this year from the same period last year.

Uotani says made-in-Japan products are still widely embraced by Asian consumers.

“In the Asia-Pacific, everything is not about prestigious brands. We, too, need to respond to the needs of society.

“In Indonesia, for example, there is bipolarisation among consumers and we need to address both [mass market and high end] segments through our range of personal care and prestige brands,” he adds.

Ultimately, he believes quality products need not be expensive and beyond the reach of the masses. Similarly, local beauty brands need to be mindful of their target market and respond directly to the needs of their audience.

There are now numerous brands riding on popular celebrities to promote their products such as Rihanna’s Fenty Beauty and Jessica Alba’s The Honest Company. Uotani says Shiseido will not be exploring such collaborations at this point in time as his current focus is on addressing the existing legacy issues in the company.

Any developments in its products, he says, will be done via its own branding and R&D.

Shiseido would, however, be banking on its make-up brands, Laura Mercier and Nars, founded by celebrity make-up artist Michèle Mercier and François Nars respectively, to remain relevant in the celebrity-backed beauty circuit.

 

Legacy issues

Shiseido, founded in 1872, faces legacy issues in taking the next step to be a global company.

The homogenous nature of Japan where everyone speaks one language and shares a common mindset dampens the ability for the company to relate to a global audience.

One of the biggest changes made by Uotani in Shiseido was to roll out the use of English as the company’s first language. 

He announced earlier this year that by October next year, English will be the first language used in the company’s headquarters in Ginza, Tokyo.

“The use of English in a Japanese company is difficult. Today, over 1,700 employees based in our headquarters have to take English lessons,” Uotani says, adding he hopes a change in language can assist in a change in mindset.

 “We have over 68 nationalities working at offices all over the world. What we need to do is to have all of their ideas debated and discussed as that is the source of innovations and ideas,” he adds.

Shiseido has over 50,000 staff globally, servicing multiple brands such as Shiseido, Clé de peau Beaute, Nars, bareMinerals and Laura Mercier. It is also a licensee for fragrances by designer brands such as Dolce and Gabbana, Issey Miyake and Alaia.

 

Impact of e-commerce

Uotani says the company is still heavily dependent on retail sales although it plans to increase its online sales by forming a strategic partnership with e-commerce platform Alibaba to introduce a wider range of products. Currently, up to 25% of Shiseido’s business in China is done via e-commerce platform.

“Brick-and-mortar shops will not go away. It is important, espe-cially for prestige brands as you have to provide counselling and also the human touch.

“E-commerce makes it easier for shoppers to obtain information and make purchases as our lives become busier, leaving us with less time to shop,” he explains.

Uotani’s journey

Shiseido Group CEO and president Masahiko Uotani is the first president in its 145-year history to be appointed from outside the company’s ranks. He joined the cosmetics giant in April 2014 after leaving Japan Coca-Cola as its CEO and chief marketing officer.

With over three decades of marketing and management experience in Japanese and global fast moving consumer goods (FMCG) companies, Uotani says working for Shiseido differs vastly from working in other industries.

“This is a business that can make people happy through beauty experiences. When a person is happy, those around them can feel it and that would create good relationships between people,” he says.

Uotani’s first-hand experience in the beauty business was when he helped set up a make-up class for his wife with a top make-up artist.

“I went home after her class and noticed she (Uotani’s wife) looked different with the new products and techniques she used from her class.

“I said, wow, you look different and beautiful today. She smiled and felt very happy with the compliment,” he recalls.

Uotani is known for his signature “hybrid model” that combines the management styles of the East and West.

“My definition of a true global company is two-fold. One is to have a strong financial foundation in terms of sales and profit-ability. That way, we can reinvest in the development of new brands.

“Secondly, it is embracing diversity, not just looking at gender but also nationality, language, background and experience,” he says.



This article first appeared in Focus Malaysia Issue 258.