Shiseido

Case Study 1 - Making China Beautiful | February 3

2011

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1. General analysis.

The case is about Shiseido, a Japanese cosmetic company, which has been expanding globally. The case explores the challenges that Shiseido has faced expanding in to the global cosmetic market. Shiseido always had the mission to expand internationally, and build businesses in the U.S, Europe and Asia. Their Asian expansion was focused on China which had a huge potential markets. They penetrated the Chinese market in 1981 by exporting their products. Shiseido at this time faced the challenges of competition from European and US cosmetic companies that had entered the China. They also faced the challenges of being a ‘foreign company’ in China. ‘Foreignness’ affected their sales due to periodic waves of anti-Japanese sentiments in China. In order to circumvent this, they introduced Aupres brand, and marketed it as a Chinese brand. Structurally, they participated in a joint venture, and then built manufacturing facilities. By 2003, the Aupres brand represented 60% of the company’s total sales in China which meant that bringing products directly to the consumers in innovative ways was vital. In order to increase their market share, they then built a large network of voluntary chain stores in China which they had used in other markets. This structure soon became problematic. Internally, they faced challenges in the area of customer service, high turnover of 30%, and building and retaining a workforce that was ‘globally minded’. The case is concerned with the future growth and stability of the brand. Shiseido faces the challenges of how to best increase their market share in China and in the US and Europe where sales had dropped. Currently, the company’s strategy is based on focusing their growth on establishing their dominance in China by creating products for Chinese people. They need to decide how best to proceed with their plans for continued international expansion. 

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