Shiseido's Strategic Overhaul-Cost-Cutting and Market Expansion

2024-12-08

For Shiseido as a whole, another core task for the next two years is to "establish a high-profit structure," which means reducing global fixed costs, further improving earnings in Japan,

the Americas, Europe, and the Asia-Pacific region, and rebuilding the business foundations in China and travel retail.

Firstly, a resolute "global cost structure reform" will be implemented, with plans to cut costs by more than 40 billion yen (approximately 1.9 billion yuan) centered on Japan and China in 2024 and 2025,

and by 25 billion yen (approximately 1.2 billion yuan) centered on Europe, America, and Japan in 2026. It is expected that more than half of the costs will come from labor expenses and other overheads.

Layoffs will not stop, and the belt will only be tightened further. The group even uses the phrase "No Sacred Cow" to demonstrate its determination to optimize costs.

Shiseido estimates that by 2026, the cost of sales will be reduced by 2 percentage points compared to 2024, marketing investment will increase by 1 percentage point, brand and R&D investment will remain the same,

labor and expenses will be reduced by 2 percentage points, and the core operating profit margin will double to 7%.

As of the third quarter, China remains Shiseido's second-largest global market, after Japan.

Fujiwara Kentaro remains optimistic: "The Chinese market is undoubtedly a huge consumer market in the medium and long term. As an Asian skin expert, our company still has a lot of new value to offer in China."

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