Online Exclusives

East Meets West

By James Zilenziger, Assistant Editor | September 30, 2013

Shiseido has been bringing together the best of both worlds for nearly 150 years.

With sales today reaching $8.6 billion, it may come as a surprise that the cosmetics company Shiseido first came to being as a pharmacy. Its founder, Arinobu Fukuhara, established Japan’s first Western-style pharmacy in 1872 in Tokyo’s Ginza district at a time when herbal medicine was norm in Japan. As the former pharmacist of a navy hospital, Fukuhara founded Shiseido to combat what he considered to be an inferior medicine market in Japan, and he sought to create a new market that separated the medical and dispensary practice in Japan.
 
To boost appeal to the public, the name Shiseido was taken from the classic Chinese text, the “Yi Jing” (“Book of Changes”), which reads, “Praise the virtues of the great Earth, which nurtures new life and brings forth new values.” Shiseido meant to capture the idea of “Oriental style, Western learning” way of thinking as a means of promoting a new inclusive culture of Eastern and Western ideas.
 
As Shiseido came to be known for its high quality products, it soon introduced Japan’s first toothpaste, the Fukuhara Sanitary Toothpaste, in 1888. Up until the introduction of the Fukuhara Sanitary Toothpaste, tooth powder was primarily used in Japan, but due to its rough, grainy texture, it tended to damage teeth. In contra, Shiseido’s toothpaste was smooth and did not cause damage to teeth; in fact, it was formulated to dissolve tarter and eliminate bad breath. Sales of the toothpaste increased gradually even though it cost 10 times as much as the tooth powder.
 
 From Pharmaceuticals to Cosmetics
 
Shiseido took its first step of transition from a pharmacy into a cosmetics company in 1897 with its new product Eudermine. With a formula developed by Tokyo Imperial University, Eudermine entered the market as a skin lotion. The lotion’s name is derived from the Greek words eu, meaning good, and derma, meaning skin. Eudermine was packaged in a beautiful glass bottle and was affectionately nicknamed “Shiseido’s Red Water.” Even today, Eudermine continues to remain a favorite product with improvements in its scientific formula and redesigned package.
 
The beginning of the 20th Century was met with the launch of Shiseido’s first cosmetic shops in 1916 followed by several major products, including Seven Colors Face Powder, Cold Cream and Hanatsubaki perfume. However, some of the largest changes that occurred through the 1920s dealt directly with the restructuring and expansion of Shiseido. By 1923 Shiseido began its Cosmetic Chain Store System in order to remain strong in a sea of emerging cosmetic companies. The Cosmetic Chain Store System strictly set prices that guaranteed distributors and retailers reasonable profits and then made contracts with distributors and retailers that abided by Shiseido’s pricing concept. Although it was at first seen by many as a risky move, the number of contracted retail stores soon went well above expectations and rose to 2,000 the following year. The result assured consumers that they could purchase Shiseido products for the same price at any store.
 
Around the same time, Shiseido established the Five Principles that even today remain company tenets. These Five Principles include:
• Quality First,
• Coexistence and Co-prosperity,
• Respect for Retailers (changed to “Respect for Consumers in 1955)
• Corporate Stability and
• Sincerity.
 
With the Five Principles in place and steady expansion, Shiseido executives took their business to the next level with the creation of three new business sections that handled cosmetology, hair dressing and children’s clothing. These new businesses staffed trained dermatologists and invited American cosmetologist Helen Grossman to introduce Japanese women to western hairstyles. As interest increased, these beauty salons sprang up in other cities throughout Japan in the form of “New Hairstyle & Beauty Seminars.”
 
A New Era
 
During the past fifty years, Shiseido has taken great strides expanding into the global market place and bringing beauty and health together into one industry. Beginning in the post-war period, Shiseido expanded its sales into Taiwan and also established its very own Shiseido Beauty Academy. With a specialized focus on knowledge and techniques in the field of beauty, the Shiseido Beauty Academy continues to be a top beauty school today.
 
In 1962, Shiseido founded Shiseido of Hawaii, and a year later Shiseido began sales in Italy as its first exports to Europe. During the next 20 years some of the establishments overseas would come to include Shiseido Singapore, Shiseido Thailand, Shiseido New Zealand, Shiseido France, Shiseido Deutschland and Shiseido Australia.
 
As expansion took off abroad, the commercial production of Shiseido-exclusive ingredient Bio-Hyaluronic Acid in 1984 helped fuel product growth.  Known for its strong water retention properties, Bio-Hyaluronic Acid, which is derived from sodium hyaluronate, has been used ever since in Shiseido’s products as a moisturizer. It also brought Shiseido into a new age in which beauty and health were combined to become one industry. With the creation of Shiseido Pharmaceutical Co., Ltd. in 1987 and the world’s first dermatological research center at Harvard Medical School in 1989, one of the first international forums Shiseido hosted in 1989 tackled the issue of “Successful Aging.” The results of the research on human aging called for new products to protect the skin from ultra-violet rays.
 
Other research identified the interaction between a type of immune cell that exists in the skin and the nerves underneath the skin. This led to the 1998 launch of the new product brand Qiora that sought to help link “scent, mind and skin.”
 
Making a Difference Globally
 
Today, Shiseido continues to make news for its support of human rights and the environment. In 2004, Shiseido partook in the United Nations “Global Pact” as a means of showing their commitment to behave as a globally responsible corporate citizen. Aspects of Shiseido’s human rights and environmental pledges in 2004 included making sure that they were not complicit in human rights abuses, the abolition of child labor and initiatives to promote greater environmental responsibility.
 
A step already taken by Shiseido includes a 10-year tree-planting program in China launched in 2008 that is filling an area of 69,300 square meters with trees. Another includes Shiseido’s participation in Caring for Climate, a climate initiative meant to support global initiatives related to climate change. Other awards most recently involve being ranked No. 1 globally while receiving 15 top awards from the International Federation of Societies of Cosmetic Chemists (IFSCC) conferences and congresses.
 
Sales rose 1.7% in the most recently concluded fiscal year and net income increased 13.5%. However, domestic sales, which cover more than 50% of Shiseido’s total sales, fell 1.3%. The strongest sales appeared in Europe and North America, and since April 2011 Shiseido has been promoting its Three-Year Plan with the aim of becoming a “global player representing Asia with its origins in Japan.” Some of the initiatives that Shiseido has taken include efforts to enhance its presence in the European cosmetics market and increase support for its major brands in the US market. Currently Shiseido’s major brand names include Clé de Peau Beauté, Za, Tsubaki, Senka, Jean Paul Gaultier, Elixir Superieur, Maquillage and Bare Escentuals.
 
New Breakthroughs
 
With 20 new products advertised on Shiseido’s home webpage, Shiseido has plenty to boast about R&D developments. Back in January, Shiseido developed an ingredient using Zizyphus jujube fruit extract, which proved highly effective to help eyelashes grow longer by promoting their growth rate. The fruits of the Zizyphus jujube are also believed to show sedative, anti-allergy and anti-stress effects and have been used in Traditional Chinese Medicine, too.

Shiseido is making its research user friendly, too. For example, check out this online video explaining why laugh lines aren't wrinkles or this video about the role that dermal cells can play in skin care.
 
Other recent research includes collaboration with Canadian bio-venture company RepliCel Life Sciences Inc. to investigate hair regenerative medicines. Shiseido and RepliCel hope to combine RepliCel’s hair regenerative medicine technology with Shiseido’s in hopes of commercializing safe and effective hair regenerative medicine that integrates beauty and medicine to help those concerned with pattern baldness and thinning hair. The current pattern baldness and thinning hair-related market (which includes hair implantation, wigs, hair growth support and hair growth agents) is estimated to be as large a 200 billion yen in Japan alone.

For more information on Shiseido, visit www.shiseido.com
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