Shiseido wants to open 5000 stores in 2008 in China

As of the end of 2006, with the help of a team of more than 2,000 local agents, Shiseido, Japan's largest cosmetics group, opened 1,700 stores in the country. This number is expected to be refurbished to 5,000 in 2008 and may continue to increase.

"In addition to Beijing, Shanghai, and Chongqing, where three department stores are strong enough, all provinces and cities in China have already opened Shiseido specialty stores." In an exclusive interview with reporters, Saito Zhongsheng, chairman of Shiseido (China) Investment Co., Ltd., said.

For a multinational cosmetics group, how to enter the broader third and fourth-tier rural markets beyond the big cities has always been the bottleneck. Shiseido’s approach is to transplant the channel integration model of “department store + specialty store” that has been used in Japan to China. This method has been operating in Japan for 80 years and has developed 20,000 stores in the area.

"In China, we select only one agent in each province and city to set up a franchise to cooperate. Then the agent signs a contract with a city-level or lower-level store, 'free signing', there is no initial fee and entry fee. In order to prevent inter-provincial goods or low-discount shipments, we will supervise the sales figures and financial statements of the stores together with the agents, and may terminate the cooperation due to the occurrence of non-compliance.” Saito Saito told reporters .

Today, Shiseido has opened 1,700 stores. According to the 2006 opening schedule, Saito Zhongsheng estimated that in 2007, Shiseido will open 700 new stores. "As far as the current situation is concerned, only specialty stores will be opened in mid-level cities in China. Next, they will also expand into the broader rural market."

For Shiseido, the department store is still the main sales channel; store is still under cultivation. Saito Tadao estimated that in 2006, Shiseido’s sales in China accounted for a quarter of sales. This proportion is expected to increase to 50% in the future.

Saito Zhongsheng revealed that Shiseido is still exploring how to sell products in supermarkets.