Making China Beautiful: Shiseido and the China Market Case Solution
Obstacles for Shiseido in globalizing:
After analyzing the case study, it is evident that Shiseido was unable to understand the difference in the culture around the globe, which is the most important thing to realize before going globalizing. Shiseido was capable in the development of innovative and high-quality products, but there was a need to incorporate this innovation with preferences of customers and culture. Cosmetic industry differs from country to country due to the nature and culture of the people. It has been seen that climatic factors influence the customers’ preferences in cosmetics.
Change in Market Preferences:
Shiseido had a wide range of product line, which hindered its ability to focus on change in particular market of cosmetic. In order to adapt the foreign culture, Shiseido had to begin with its primary products to sustain in the overseas markets. Change in the external markets environment was also an important factor to identify.
Understanding of the differences in Japanese and Europe cosmetics industry:
The most prominent difference between Japanese and U.S. cosmetics was the variety of colors in makeup products. In the the U.S., the Japanese people preferred to buy natural skin care products and were also concerned about the beauty of natural skin, whereas the needs of Americans differed in the selection of beauty products as they were eager for makeup products; it could be said that Americans were more beauty conscious. Strong traditions and cultural values in different countries of Europe have been referred as the key aspects affecting the sales of cosmetic in the Europe region. Another factor that had a profound effect on the globalizing cosmetics industry was the trend where people were becoming increasingly fashion conscious. Change in the perceptions of people and increases in awareness regarding the use of makeup products are also reshaping the industry significantly.
A difference between Japanese and Chinese cosmetics can be seen in the color of foundations. Chinese women want whiter skin than actual, whereas, Japanese women’s preferences are different as they want colors similar to their natural skin colors. Hospitality in the beauty consultancy was also difficult for Shiseido to find in China because most of the Chinese people didn't have the experience of being provided excellent services with hospitality.
Political-Legal Factors:
Political factors have twisted the outlook of the cosmetic industry in the world. This scrutiny was relevant for Shiseido. It was expected that Shiseido was able to obtain a competitive advantage in the Chinese market with its innovative Japanese technology by creating a good relationship with the Chinese political class. As a result, this would enable the company to increase its access into the closed market.
The Chinese government had integrated the foreign exchange rate and also introduced consumption tax, which largely affected the premium cosmetics. This forced the company to make premium products expensive without being changed in terms of quality.
Technological Factors:
In any industry including cosmetic industry, innovation and quality are the critical success factors. Technology has influenced the way of the cosmetic industry in China and continued to shape the course taken by this sector. Due to the reduced technological advancements in China, Shiseido could barely produce cosmetics upon its entry in the region of China. This limited Shiseido to only manufactured toiletries while other competitors invested heavily in new technology, which helped them to improve efficiency in order toattain competitiveness.
Industry Analysis of Shiseido:
Porter's five forces:
Barriers to entry:
Barriers to entry are low due to the monopolistic nature of the cosmetic companies that operate in the market. Government barriers are possibly the hindrances, primarily because of the regulations that the company requires to operate.....................
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