For Masaru Takeyasu, the Chairman of Kao (China), the recently passed month of November was probably the month where he made the most public appearances since taking office. When CHAILEEDO saw him again at the “2023 Forum on Beauty Economy and Sustainability, One of ZGC Forum Series of Activities” in Beijing on November 29th, his recent trip to Nanchang had just ended.
By frequently connecting with the market, as he puts it, AI big data can indeed provide market-oriented data references and solve many problems, but there are still many things that cannot replace human efforts. “At Kao, we emphasize the concept of ‘on-siteism,’ hoping to use our own eyes to see, to feel, and to explore this market with curiosity.”
For companies, on-siteism means being rooted in the local market. It is precisely because of practicing this belief that Kao has formed a deep relationship with China, and China has always been a priority market under Kao’s strategy.
The Changes and Constants of the Chinese Market
The curtain of comprehensive reform for Japanese cosmetics companies has been raised, and the era of change requires practical and innovative talents. Earlier this year, Masaru Takeyasu, who had worked at Kao in Japan for nearly 30 years, received a “new challenge” and took over as the head of Kao (China) Consumer Products. This personnel adjustment is part of Kao’s transformation.
Recalling his experiences and observations of living in China, Masaru Takeyasu feels that the market changes very rapidly and quickly. “Sometimes when I walk on the streets of Shanghai, I see that the entire city is very clean, and everyone has a high awareness of environmental hygiene. Perhaps it is also influenced by the COVID-19, and consumer behavior has changed significantly compared to before.”
He mentioned, “In China, consumer preferences and purchasing habits vary in different regions. Consumer demands are becoming more diverse and personalized, and the requirements for products are constantly increasing.”
Although the Chinese market is constantly changing, he believes that people’s desire for a healthy body and mind and the desire to become more beautiful have not fundamentally changed. “Health is a key word, but it is not just physical health; there is also psychological health.”
He believes that when people start to resume social activities, skincare and makeup are essential steps, and cosmetics are products that can provide “emotional value” to people. “Personally, I think cosmetics are products that can bring vitality to people, so we have high expectations for the Chinese cosmetics market and believe that it will soon recover and thrive.”
Based on the long-term optimism about the Chinese market, Masaru Takeyasu emphasizes that the Chinese market is one of the most important overseas markets for the Kao Group. “Whether the Kao Group in Japan can develop in a healthier and better way, the growth of the Chinese market is crucial.”
It should be noted that in terms of sales volume, the domestic Japanese market is still Kao’s largest market. However, outside of Japan, China has become Kao’s largest overseas market. Prioritization means that while maintaining strategic synergy with the global market, the Chinese market has sufficient independence and priority in resource allocation.
Consumer Insights, R&D, and Full Localization
Not only for Kao but also for Japanese cosmetics companies in general, China remains an important market that cannot be ignored. Winning in China is also a key driver for corporate reform. Firstly, this is determined by China’s position in the global beauty market. China is the world’s second-largest cosmetics market, and the view that it is a trillion-dollar beauty market has already become deeply ingrained.
Secondly, the Chinese cosmetics market is ever-changing. In order to continue growing in China, international companies need to emphasize the importance of “localization,” reevaluate their business models, and adjust their business strategies.
Regarding localization, Masaru Takeyasu, the head of Kao (China) Consumer Products, will introduce the use of big data to gain a clear understanding of the Chinese market. Additionally, combining actual research and firsthand experiences will be crucial in making decisions and developing products.
It is worth noting that Kao China Research & Development Center, established in 2004, plays an important role in providing technical support for Kao’s development of products tailored to Chinese consumers. It reflects Kao’s commitment to localizing innovation.
One of the latest examples that showcase Kao’s localization and innovation is the launch of the Curel Wrinkle Cream specifically researched for Chinese consumers last year. “Curel cream has received great support from young consumers because of its moisturizing, wrinkle-reducing, and firming effects. We are delighted with the results,” says Masaru Takeyasu with a smile.
Perhaps due to the positive market feedback on this cream, Curel is planning to introduce the Curel Soothing Repair Essence next year, further expanding the line of wrinkle-reducing products. The essence is also developed and produced by Kao’s China team.
Furthermore, CHAILEEDO has noticed that Curel recently launched an activity in China called “Co-creation of New Children’s Skincare Products,” expressing the brand’s desire to develop new products specifically designed for Chinese babies through this co-creation initiative. This will be Curel’s first children’s skincare product line.
Kao’s prominent position in the field of children’s health care is well known. The decision to explore new business opportunities in the children’s skincare market with the Curel brand stems from its focus on dry and sensitive skin, with allergy science being the first hurdle that almost all baby brands must pass. In other words, Curel is highly compatible with the children’s skincare market. At the same time, Curel is also one of the well-recognized brands in the Chinese market for Kao.
“It’s not just Curel that can develop children’s products, but when considering children’s products, we also take brand characteristics into account. So, Kao hopes to start with Keana Nadeshiko and focus on the development of children’s products,” emphasizes Masaru Takeyasu.
He also mentions that “Curel and Freeplus are the two most well-known brands for Kao in the cosmetics business, so we have chosen them for localization.”
From these co-creation initiatives, it is clear that Kao’s localization and R&D are not conducted in isolation but rather rely on the collaboration between external expertise and their internal R&D capabilities. It is worth noting that as early as 2013, Kao (China) Research & Development Center established a joint laboratory with Shanghai Jiao Tong University’s Bio-X Research Institute.
“After coming to China for a year, I have become more and more aware that relying solely on internal resources within Kao has its limitations. We should strengthen collaboration with the industry and government departments to progress together.” This means that Kao China will spark more collaboration with various sectors of the Chinese industry in the future.
China is an important priority market
However, the challenges faced by Japanese cosmetics companies should not be underestimated. One challenge is how to respond to the rise of other international and Chinese brands, while the other is how to regain shaken consumer trust.
“This is a problem that all Japanese companies must face,” admits Takeyasu. For Kao, the strategy is to accelerate localization, cultivate local brands, and launch excellent local products to compete.
“The concept of ‘creating high-quality products’ has penetrated deep into the hearts of all Kao employees. Our unwavering mission is to create high-quality products that help consumers maintain health and beauty,” he says. “Kao has always been rooted in skincare scientific research and possesses cutting-edge technology. We are confident in continuously providing consumers with safe-to-use products that demonstrate the excellent quality of our cosmetics, even in challenging times.”
According to Takeyasu, creating high-quality products not only means benefiting consumers in the present but also considering the future. “We deeply consider the environment, reducing plastic usage and emissions, and develop products based on these premises.”
This sustainable development guideline is already ingrained in Kao China’s business philosophy. In 2011, Kao China released its first Corporate Social Responsibility Report, demonstrating how the company balances business value and social value. According to Kao’s latest ESG vision released last year, the company aims to reduce energy consumption and water usage by 18% compared to 2020, and reduce carbon emissions by 40% compared to 2020 by 2025.
Furthermore, Kao will reduce plastic packaging, utilize recycled resin, and introduce refillable options. Compared to regular laundry detergent, using refillable options and the product itself can reduce carbon emissions by 50% and resin usage by 40%. Kao also hopes to create a better future, a clean global environment, and a harmonious coexistence society through technological innovation.
During the “2023 Forum on Beauty Economy and Sustainability” mentioned at the beginning, Takeyasu once again emphasized Kao’s ESG strategy, stating that sustainable development is the only path for the company’s growth.
He also discussed the new transformations and considerations brought by the Chinese e-commerce landscape to company marketing. “In the past, advertising was the main method, but now we need to accurately convey information to target consumers through various content formats and attract them to actively learn about us.”
According to Takeyasu, if the company continues with outdated practices, it won’t progress, and employees won’t have the motivation to work actively. Kao will continuously encourage its employees to take on new challenges.
Circumstances change, and water takes different forms. Rejecting the old mindset of relying on a single approach and adjusting business tactics flexibly to adapt to the complex and ever-changing commercial environment is essential. For Kao, the unchanged goal in its 30 years in China is to strive to create products that enhance consumers’ quality of life and coexist with beauty.”
