TOKYO — Shiseido Co. Ltd.’s newly tapped president and chief executive officer Hisayuki Suekawa is every inch an inside man — and not just because he’s spent his entire 28-year career within the halls of the Japanese beauty giant.
This story first appeared in the January 20, 2011 issue of WWD. Subscribe Today.
Suekawa, 51, said he always wanted to work for Shiseido to repay the company for employing three members of his family. His grandfather worked in the finance department while his father put in years in sales and management, and his mother made her livelihood behind the cosmetics counter.
“Ever since I was born, every single cosmetic or toiletry item around me was from Shiseido,” Suekawa said in his first interview with the international press since the company announced last week that he will take over as Shiseido ceo and president as of April 1. “I have a great deal of respect for the company and I always felt…I want to be able to repay that debt.”
Suekawa, the second-youngest person to hold the president title in the company’s history, replaces an outgoing Shinzo Maeda, who will ascend to the role of chairman. The incoming boss was Maeda’s right-hand man and oversaw corporate planning until now. He said he plans to guide the company in a similar direction as that of Maeda, putting an emphasis on modernizing the corporate structure and increasing the company’s international reach.
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“We’re trying to be as global as possible in our outlook and the way in which we serve our markets,” Suekawa said, adding that the company’s proportion of sales in Japan to sales abroad should be about 50-50 by 2017. Currently, Japan generates about 60 percent of total sales and other markets account for 40 percent.
He also stressed that the company is “very, very willing” to look at strategic alliances and acquisitions but only if they make strategic sense and doesn’t want to ink deals to merely beef up the size of the company. Suekawa said last year’s acquisition of Bare Escentuals Inc. made sense because it complemented Shiseido’s skin care-heavy portfolio with a makeup brand and gave the Japanese company an increased presence in the U.S. market.
Shiseido is attempting to become a global player but it’s not trying to become Asia’s answer to Procter & Gamble Co. or L’Oréal, Suekawa said. “I don’t think it’s going to be possible to match those two companies in terms of scale,” he said.
Goldman Sachs analyst Katsunori Tanaka said he doesn’t expect Suekawa to bring about radical change.
“We do not think these appointments signal any major change in the direction Mr. Maeda has set for the company,” he wrote in a recent report. “Mr. Suekawa participated in the establishment of Shiseido’s mail order business and we expect him to strengthen this segment, which we think is promising for the company.”
In October, Shiseido cut its net profit target for the year ending March 31, citing costs related to the Bare Escentuals acquisition. It now expects full-year net profit to decline 25.8 percent to 25 billion yen, or $302.67 million at current exchange. Sales are seen rising 6.8 percent to 688 billion yen, or $8.33 billion, higher than originally expected, as growth in China and other emerging markets continues.
Cosmetics sales in international markets including China are seen advancing 20 percent, which is helping to compensate for Shiseido’s sluggish performance in Japan. Sales there are expected to decline 1.8 percent as consumers cut back their spending in tough economic times.
Suekawa said Shiseido needs to do a better job communicating the value of its products and the research that goes into them to persuade Japanese consumers to ultimately buy them. Although he didn’t divulge specifics, he said the company will be dramatically revisiting the way it communicates with media and trains its sales staff.
“I think the situation has changed from the days when the manufacturer’s role was simply to put together a great product, do advertising and then say ‘this is great’ and that would be enough for the customer. I think it’s gone beyond that point.”
As for international markets, Suekawa said the fast-growing Chinese market will continue to be a top priority for the company. Although he acknowledged that China’s recent changes in ingredient labeling regulations have forced Shiseido to delay some product launches in the country, he downplayed the impact of the overall situation.
The executive said he thinks the Chinese authorities are just trying to be more rigid in terms of labeling and ultimately show “concern and care” for their citizens. He said it’s only logical that these changes take time and those in the business should just accept it. He sidestepped the idea that the measures might be veiled attempts at protectionism.
“Of course there are different interpretations. Rather than looking at it as an attempt to block us, I think it’s more appropriate to look at the context of the relationship,” he said, referencing the company’s 30-year history in China. “It’s far more constructive to think, well if a new product is going to be delayed, how can we better sell the products that we already have in the market?”