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Global makeover of a beauty icon
FOR most beauty brands, the idea of running an ad revolving around men in drag wearing make-up would be the equivalent of branding suicide (unless you are MAC and the ambassador in question is drag queen Rupaul). Much less a beauty institution that hails from Japan, a country where to say that gender stereotypes still reign is an understatement.
But when High School Girl, a commercial spot featuring doe-eyed "schoolgirls", who were in fact slender-limbed men wearing make-up, went viral, Shiseido chief executive officer Masahiko Uotani didn't bat an eyelid. In fact, he didn't even know about the ad.
"One of my daughters said to me, 'you know, Shiseido is doing great in advertising', and I said 'what's that?' because she is usually very critical of what I do," says Mr Uotani with a laugh.
"She said, 'oh, don't you know High School Girl? It's very popular with young people now. Everybody talks about this. You have to know that.'
"I didn't know that was going on in our company. It didn't get my approval, which is OK, which is great. They just did it themselves. Ran a risk themselves. That's a great culture. And when we had several million people downloading the video, that's the time I came to know about it."
Then again, Mr Uotani isn't your typical Japanese shachou. Educated in the US, with a master's in business administration from Columbia Business School, and with a background of well over 30 years in the consumer goods industry, he is the first Shiseido president to be appointed from outside the company in its 144-year history. This reflects the board's determination to evolve the company from its Japanese roots to being a leading global business, but it's a journey that is, by Mr Uotani's own account, "very challenging".
"This is a company in Japan, where people just go and work for a company after graduation from college and stay there for almost their whole career," says the former chief of Coca-Cola Japan.
"But we are now recruiting people from outside as well, specifically for their knowledge and expertise, their experiences. So, people who have a different kind of background, nationality, religion, culture, language; it's really about creating a global company."
The history of this skincare and make-up behemoth in fact stems from founders who introduced international innovation to Japan during the country's Meiji era - a period of extreme modernisation. Shiseido was founded in 1872 in the Ginza district of Tokyo as the country's first Western-style apothecary. Its founder's son, Shinzo Fukuhara, went on to study western pharmacology in the US, travelling to the continent via steamship, before picking up the art of photography in France after his graduation. His admiration for the arts, science and ideas of the West inspired him to return to Japan and introduce a new lifestyle to eastern traditions and sensibilities.
And Mr Uotani is better positioned than most to revive this East-meets-world heritage, having helmed Coca-Cola Japan as its chairman and president for 10 years. His approach to making over a brand that has failed to remain relevant to capricious consumers involved a "hybrid model" that leverages his global and Japanese business experience. Since coming on board in 2014, he has grafted US management practices onto the Japanese culture that constitutes the core of Shiseido. The Shiseido Group currently employs 46,000 people in 120 countries.
"Fundamentally, Coke and Shiseido are consumer businesses, consumer brands and marketing businesses. They're the same," says Mr Uotani.
"As for Coke, we always say it provides refreshment and happiness for consumers. And then for Shiseido, it allows people to look nice, beautiful, and not only just externally, but internally. So it is always an emotional value that most companies are creating. Fundamentally the brands are the same for me. If I were working for IBM, however, that would be quite different."
The brand has also started on a comprehensive brand innovation in January 2016, and there will be a sequential overhaul of products, advertising visuals, models, store counters, brand logo and other aspects of communication. Annual sales for the group rose 12.6 per cent to 763.1 billion yen (S$9.8 billion) in 2015. According to a 2016 Euromonitor report on beauty and personal care in Japan, Shiseido remains the leading player in the sector thanks to consumer-driven marketing and new product development. And Mr Uotani attributes much of this success to the injection of talent from different backgrounds.
"Diversity to me applies not just to gender, but also to include non-Japanese people, some of whom can even speak perfect Japanese," says Mr Uotani.
"Coca-Cola used to have the same situation years ago as an American company. Then it became global and faced some challenges. So always, our philosophy is to 'Think Global, Act Local'. So, I can apply that to Shiseido." In recruiting diversely from outside, for example, he is "learning a lot from (his) experiences to apply to Shiseido", he adds.
This need to appeal to an international audience has been reflected in the brand's global advertising campaign, which featured Hungarian model Eniko Mihalik, Dutch-born model of Egyptian-Moroccan descent Imaan Hammam and Asian-American model and "It" girl Asia Chow - at a time when most Asian beauty houses still use Chinese, Japanese or South Korean celebrities to front their brands. But more than an act of celebrating the many faces of beauty, the move was all the more crucial for Shiseido because of the group's varied portfolio.
Multitude of labels
Apart from its eponymous beauty brand, the Shiseido Group has a multitude of labels within its stable, including US make-up brands Nars and Laura Mercier, European drugstore brand Avene, luxury skincare line Revive, and mineral make-up brand Bareminerals. Most recently, it secured a beauty licensing deal to develop, manufacture and distribute Dolce & Gabbana's fragrance, make-up and skincare. That is on top of Shiseido-developed brands such as the high-end Cle de Peau Beaute.
"If you take a look at our portfolio, Shiseido, this brand is firstly very much Japanese, but we are going global, it's part of our identity," says Mr Uotani.
"Like Nars. Nobody really sees that as a Japanese brand. A very talented guy called Francois Nars comes up with a lot of creative ideas, and that makes that brand so interesting and so exciting for the consumers."
However, one of the many challenges for the group is to claw back its share of the market from Korean beauty brands that have catapulted to the top of beauty junkies' wish list of must-buys.
"The reason people really like Korean beauty brands is that they are becoming more and more diverse. There are people who love Japanese brands, and there is a group of people who love Korean brands, there is a group of people who love local Chinese brands these days, and there's also clearly a group of people who love the western brands," says Mr Uotani.
"Years ago, we were simply putting our products on the shelves, at the counters, saying 'hey, Shiseido is a Japanese company'. And that's it. Now, we have to tell consumers why a Japanese brand is good, why we are confident to tell them that they should be buying our brands, and what is the value of that."
A marketing maverick at heart, Mr Uotani first came into contact with Shiseido through Brandvision Inc, a company he founded while at Coca-Cola to help propel the image of Japanese companies. He was initially appointed outside chief marketing adviser of Shiseido Company in 2013 through Brandvision, before heading the beauty company a year later.
"To me, marketing is a combination of being logical and being emotional," says Mr Uotani, who is a father of two daughters who are in their 30s.
"In my experience in the US, they seek for logic first, the science. On the top of that, in this kind of business, you need that emotional aspect as well. Particularly in the luxury business, as you can see in the automobile business, the Italian cars, it's more than just logic, it is also about feelings. You have to convey some emotional values. It doesn't mean that Americans really exclude that, but in Japan and Asian countries, including Singapore, we tend to place the priority on relationships as a value."
Tugging on heartstrings to sell US$95 serums certainly seems to be paying off. Mr Uotani, for one, still believes in creating a luxurious shopping experience and engaging with customers through physical retail presences first and foremost, before they could consider re-purchasing a product online.
"Because you want to feel it, to touch it, or to really try it out on your face," explains the former vice-president of Kraft Japan. "We can't simply send out e-mails to the consumers saying 'oh, we just got our e-commerce site up, so buy something'. They have to try it."
And this guanxi-driven model seems to be working well in China, the new epicentre of luxury consumption. Shiseido saw a modest 4 per cent growth in 2015 in the country after recording a 4.8 per cent dip the year before. The country is one of Shiseido's biggest overseas markets (with the US being its largest international market in terms of sales), and Mr Uotani is upbeat about the beauty industry which reports strong growth in spite of an economic downturn.
"Back in the 1970s, Japan's economy was growing by 6 per cent, mostly driven by infrastructure businesses. And then, when it came to a certain point, it really slowed down," he recalls.
"The consumer economy started growing. So, in that sense, China is exactly going through the same kind of transition. Day-to-day consumer business may not be really growing like it did in the past, but still, it's growing. It doesn't mean we can sit back and relax, we always have to be watching and monitoring. But I'm quite optimistic in that sense."
But lest customers assume that Mr Uotani is all about the dollars and cents rather than the serums and cremes, the youthful-looking 62-year-old admits to being a bit of a fashion and beauty junkie and has been a fan of skincare products even before joining Shiseido.
"Actually, I'm not joking, this is really serious," reveals Mr Uotani, who swears by the Shiseido Men Total Revitalizer face cream.
"When I was at Coca-Cola, I would flip through fashion magazines, read about brands and I started using skincare products.
"Even more recently, I was on a flight and I spotted a new Cle de Peau product, La Creme, through the in-flight shopping service. It is quite expensive, almost US$800, but I bought it for myself. I took it back home and my wife said 'why do you keep buying products? We already have so much at home!' "
Besides, the well-groomed honcho needs to give love to the multi-billion-dollar business he works for, if he wants to achieve his ultimate goal: "Obviously Coke is one of the greatest brands in the world, and my mission for Shiseido is to be a global brand as well."
Shiseido Group CEO
1954: Born in Nara Prefecture, Japan
1977: Graduated with English degree from Doshisha University, Japan
1983: Graduated with MBA from Columbia University
1977: Joined Lion Dentifrice (currently Lion Corporation)
1991: Became Representative Director, Vice-President of Kraft Japan Ltd (currently Mondelez Japan Ltd)
1994: Appointed Director, Executive Vice-President and Chief Officer of Marketing of Coca-Cola (Japan)
2006-2011: Chairman of Coca-Cola (Japan) (retired in Dec 2011)
2007: Appointed Special Adviser of NTT Docomo
2012: Appointed Special Adviser of LIXIL Corporation
2012: Appointed Director of Citibank Japan (part-time)
2013: Appointed Outside Chief Marketing Advisor of Shiseido
Since 2014: President and CEO of Shiseido Group