U.S. RECESSION MAKES IMPACT IN ASIA

Byline: Koji Hirano

TOKYO — Reverberations from the U.S.- led recession have been felt around the world, according to Morio Ikeda, president and chief executive officer of Shiseido Co. Ltd. “A serious slowdown was seen in the global economy during the second half of 2001,” he said. “But the economy on a worldwide basis is expected to pick up in 2002.”
It won’t be easy, though. Consumers are reluctant to spend, putting pressure on marketers to offer attractive value and increased service.
“Shiseido plans to generate one-fourth of the entire consolidated sales from overseas operations in 2004,” he said. “Overseas markets are very important for Shiseido’s growth, and our management resources will be allocated to them according to the individual market’s contribution to our entire business. First, we will strengthen the beauty business in the dramatically growing market of China. We established the division in China to promote effective operation. As part of our aggressive expansion [in China], brands from middle to the high end will be introduced.
“Secondly, we will review and reorganize the brand portfolio in the international market,” added Ikeda. “We will make the greatest use of synergy in improving our main brands such as Shiseido for cosmetics, BPI for fragrances and Zotos for hair care as well as brands like Decleor, Nars and Ipsa. Also in Asia, we will firm up the foundation of the market by introducing brands to the middle-mass market as well as to the prestige market. “The third point is thorough cost reduction,” said Ikeda. “In order to compete in the global competition, a slimming down of the business structure is a must, while introducing attractive, new brands. We must make further cost reductions in both domestic and international production sites. Also, we will aggressively seek strategic alliances with companies outside the Shiseido Group.”

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