top-rated free essay

Making China Beautiful: Shiseido and the China Market

By Luckie007 Dec 10, 2010 697 Words
Problem: The chain-store distribution expansion strategy Shiseido is using in China is resulting in increased turnover, sales of counterfeit products and consumption of training resources. Analysis and Evaluation: Shiseido began its movement into China in the 1980s. First there was exporting, then a joint venture and finally, direct investment with the establishment of a manufacturing facility. During this expansion, the company’s goal was stay focused on Chinese culture and to create products especially for Chinese people. This was demonstrated many times; for example, the HuaZi line produced in China for Shiseido had a label on the back of the packaging that made a reference to the technological cooperation provided by Shiseido of Japan. Shiseido wanted to put out the message that the product was a Chinese one created with their help instead of the other way around. In addition, a separate line was created for Chinese women (Aupres) and it was advertised using Chinese models only. This strategy worked very well for Shiseido; in 2003, the Aupres brand represented 60% of the company’s total sales in China. This success led Shiseido to conclude they needed to create a network of chain stores to increase sales and market share. Shiseido introduced the voluntary chain store system in Japan in 1923. The idea was to have stores that would work cooperatively with the manufacturer. There was no franchise fee and the stores were not contractually bound to stay in the network for any specific period of time. Shiseido required the products sold by company provided representatives and that they were given exclusive retail space. This outlet strategy was extremely successful during Japan’s economic boom. The company had as many as 25,000 stores in the late 1990s. In 2003, Shiseido employed the same chain store strategy in China as it had done in Japan. The company established contracts with the stores outlining terms such as pre-payment for product. In return, Shiseido would provide training and support to help the business grow. The company’s goal in China was to promote their high quality product through the best service available, so the expectations for the employees were elevated as well. The launch was successful, but problems started to arise. Stores were caught selling counterfeit product, annual turnover (between the department stores and the chain stores) was 30% and training was taking up more time and resources than Shiseido had anticipated. To ensure sustained success, Shiseido can address these issues a few different ways: * Fight counterfeiting through working with the Chinese government to protect intellectual property rights and to find and shut down operations making the knock-off products. * Pro: The reduction of counterfeit products increases the protection of the brand. * Con: Shiseido may face resistance from the government since they are a foreign company. * Employ more control over training operations when entering into contracts with chain stores. Provide more intense support to ensure that the staff is properly trained and is on board with the company’s philosophy. * Pro: More thorough training will reduce the turnover rate. * Con: This strategy will require a great amount of resources to be used prior to and during the life of the contract. * Drop the chain stores and stay with selling the product through department stores only. * Pro: Less human resources consumed for training.

* Con: Shrinkage of market share due to reduced distribution channels. Recommendation:
The company wants to succeed in China with a strategy that is proven in Japan, and this can be done through a training program which they tailor more towards the Chinese people. Shiseido needs to revert back to its earlier goal of keeping the Chinese culture in mind, because this will be an effective way to teach new employees the company’s vision and values. First, research training and reward methods effective with the Chinese and use this to revise the current policies. Second, pre-screen employees using a computer test. Third, permanently relocate experienced beauty consultants to China so there is constant support within the country. These tactics will help reduce the turnover rate, and eventually reduce the amount of intense training resources needed.

Cite This Document

Related Documents

  • Making China Beautiful: Shiseido & the China Market

    ...MAKING CHINA BEAUTIFUL: SHISEIDO & THE CHINA MARKET I. Problem The Shiseido company is weak in understanding the market needs and is looking to create a strategy that will both increase global market share and reap success in the high potential Chinese market. II. Alternatives/Recommendations 1) Invest heavily in market research section...

    Read More
  • Mobile Payment Market in China

    ...Mobile Payment Market in China 2014-2018 Mobile payment is a form of financial transaction wherein a mobile device is used to pay for purchases of goods and services by way of communication networks or technologies instead of using cash, check, and credit/debit cards. It is also known as mobile money, mobile money transfer, and mobile wall...

    Read More
  • POCT Market in China

    ...POCT Market in China 2014-2018 Point-of-care Testing (POCT), also called near-patient testing, is usually performed outside the clinical laboratory setting. It helps in making fast clinical decisions and thus providing appropriate treatments and medication. The increasing incidence and prevalence of lifestyle diseases such as diabetes, hea...

    Read More
  • Shiseido in China

    ...Case- Shiseido: Channeling Cosmetics in China 1. Marketing and distribution channels for cosmetics products performed mainly transactional and logistical function. Distribution channels such as the voluntary specialty chain stores perform transactional function when they buy these cosmetic products from the manufacturer and sell them in their...

    Read More
  • China

    ...BreAnna Melter China-Section 6 Mini Research Paper When many people think of China, one of the first things that pops in their head is the One Child Policy. China's One Child Policy was created in 1979 by Chinese leader Deng Xiaoping to temporarily limit communist China's population growth. It has since then been in place for more than 32 y...

    Read More
  • E-Commerce Services Market in China

    ...E-Commerce Services Market in China 2014-2018 China is one of the fastest growing e-commerce markets in the world. Traditional retail and consumer brands are looking for a solution that can give them expertise to enhance their online presence. Considering the current state of the market, starting an e-commerce operation in the country is l...

    Read More
  • Carsharing Market in China 2014-2018

    ...Carsharing Market in China 2014-2018 Carsharing is a membership-based, self-service system, which contains a network of stations and vehicles, offering an alternative to traditional car ownership for individuals and companies. In this system, vehicles are owned by a separate firm, organization or individuals, and are shared by users for sh...

    Read More
  • Market Analysis China Steel Industry

    ...China's demand for steel has grown at a fast pace in the past decade. In the next five years, both production and demand will continue to grow. Steel Markets China report examines China's economic trends, investment environment, industry development, supply and demand, industry capacity, industry structure, marketing channels and major industry ...

    Read More

Discover the Best Free Essays on StudyMode

Conquer writer's block once and for all.

High Quality Essays

Our library contains thousands of carefully selected free research papers and essays.

Popular Topics

No matter the topic you're researching, chances are we have it covered.