Mandom Corporation

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Mandom Corporation

5-12 Juniken-cho
Chuo-ku
Osaka-shi, OSK 540-8530
Japan
Telephone: (81) 06 6767 5001
Fax: (81) 06 6767 5044
Web site: http://www.mandom.co.jp

Public Company
Incorporated: 1927 as Kintsuru Perfume Corporation
Employees: 2,054
Sales: ¥47.92 billion ($422.55 million) (2006)
Stock Exchanges: Tokyo
Ticker Symbol: 4917
NAIC: 325620 Toilet Preparation Manufacturing

Mandom Corporation is an Osaka-based manufacturer and distributor of hair care, skin care, perfumes and deodorants, and other personal care products, including cosmetics. The company has traditionally specialized in serving the men's personal care market, and is one of Japan's leaders in that segment through its top-selling brands Gatsby and Lucido. Mandom also produces hair care, beauty products and cosmetics for women under the Lucido L and Simplicity brands. Other company brands include professional hair care and other products under Dr. Renaud; the Japanese license for distribution of the Guinot brand; hair care brands Formulate, Aristia, and Direction Refilia; the women's cosmetics brand courrèges; and international brands Pixy, Pucelle, Miratone, and Johnny Andrean.

Founded in 1927, Mandom launched its first international operation in 1959, with a production partnership in the Philippines. The company has since expanded its range of operations to include manufacturing and distribution subsidiaries in China and Indonesia, and sales and distribution subsidiaries in Taiwan, Korea, Hong Kong, Singapore, and Malaysia. Asia region sales account for approximately 25 percent of group sales, which neared 48 billion ($422 million) in 2006. Mandom is listed on the Tokyo Stock Exchange. The founding Nishimura family continues to lead the company, as represented by Motonobu Nishimura, president and chairman of the board.

PRE-WAR PERFUME ORIGINS

Mandom Corporation was founded in 1927 by Shinpachiro Nishimura as Kintsuru Perfume Corporation. Named after a highly fragrant flower also known as the Japanese Stone Orchid, the company soon established its name among Japan's cosmetics and hair care industry. The launch of the company's Tancho Tique "hair control" stick in 1933 provided the company with its first major commercial success. Also known as the Tancho Stick, the pomade remained highly popular among Japanese men for decades, and continued to be featured as a company mainstay into the next century. The success of that product also encouraged the company to focus its growth efforts specifically on the men's care sector.

The company's importance in the Japanese market was underscored following the war when Shinpachiro Nishimura was named as the president of the Kinki Cosmetic Industry Association in 1949. By the end of the 1950s, the company had launched its first effort to expand beyond Japan. In 1958, the company reached a technical agreement with a partner in the Philippines, with production beginning soon after. By 1959, the popularity of the Tancho Tique led the company to change its name to Tancho Corporation.

The next generation of the Nishimura family took over the leadership of the company in 1961, when Hikoji Nishimura was named company president. Founder Shinpachiro Nishimura died in 1966. Under the second generation of family leadership, which also included future company president Ikuo Nishimura, Tancho continued to explore international expansion. The next step in that direction came in 1969, when the company started up a joint venture in Indonesia. PT Tancho Indonesia, later wholly owned by the company, became the Tancho's primary international manufacturing center for its growing international sales effort.

This effort was further boosted in 1970 when the company launched a new line of highly successful men's care products, called Mandom. The launch of the new line, which took its name from a combination of the words "Human" and "Freedom" was backed by an innovative advertising campaign featuring Charles Bronson. The ad campaign became the first of a long series of Japanese ads to feature top Hollywood stars. The highly successful launch also inspired Tancho to change its name again, to Mandom Corporation, in 1971.

The following year, Mandom teamed up with French dermatological cosmetics developer Doctor Louis Raymond Renaud, founding the Japan Doctor Renaud Cosmetics Company to launch the brand for the Japanese market. That subsidiary, which changed its name to Piacelabo in the mid-1990s, later opened up its own salons, and began marketing a range of dermatological cosmetics, in addition to the Dr. Renaud brand.

In the meantime, Mandom itself had continued its strong growth, backed by the construction of a new factory at Fukusaki in 1976. The expanded production also encouraged Mandom to take over its own distribution operations, and by the end of the decade the company had put its own sales force into place. The shift to direct sales was initially aided by Mandom's launch of another highly successful line of men's care products, called Gatsby. That line went on to become the company's flagship brand.

1980–1993: MEDIUM-TERM PLANNING STRATEGY

Despite the success of the Gatsby brand, the shift to direct retail sales had proved disastrous for the company. By 1980, the company had been forced to abandon the direct sales model, returning to wholesale distribution. Even having taken this action, Mandom found itself in financial difficulty at the beginning of the 1980s. The period saw a change in command, with Hikoji Nishimura becoming company chairman, and Ikuo Nishimura being named as company president.

In order to pull itself out of its financial problems, Mandom instituted a new corporate culture, in which employees were asked to contribute to the management process. As part of that effort, the company launched the first of a long series of medium-term plans. These plans established specific areas of focus within the company's management and operations, as well as establishing strategic objectives over periods generally ranging from two to three years. The first medium-term plan, which spanned from 1982 to 1987, sought to restructure the group's management and corporate culture, which also included a redesign of the company's logo and a revitalization of the company's brand family. Later medium-term plans included product extensions, the group's initial public offering, international growth objectives, and the like.

Backed by the new planning process, Mandom soon returned to its former healthy growth through the 1980s and into the 1990s. The company made its first effort to enter the women's cosmetics market in 1984, with the launch of the Pucelle My Lip line. The company also extended the Gatsby brand family, backed by the construction of a new production facility at its Fukusaki site, which was designed specifically for the manufacture of aerosol products. The new site also enabled the company to add men's deodorants to its range of products.

COMPANY PERSPECTIVES

Mission Statement: Aiming to provide a comfortable lifestyle supported by health and beauty.

Mandom went public in 1988, selling shares on the Tokyo exchange's over-the-counter market. The public offering boosted the company's next international growth effort, with the creation of a joint venture in Singapore in 1988. That subsidiary later became wholly owned by the company. The following year, Mandom added a sales and distribution subsidiary in Taiwan, then, in 1990, entered Thailand, establishing the Mandom Thailand joint venture. By then, the company had a new strong-selling brand, Lucido, launched in 1989. The new cosmetic line was among the first in Japan to boast a fragrance-free formulation. The success of that line led the company to launch a fragrance-free women's brand, Lucido L, in 1993.

Mandom began building a new headquarters in the early 1990s which was completed in 1993. The company also expanded its Fukusaki factory with a facility dedicated to tube filling. At the same time, the company added a formal presence in the Philippines, establishing a joint venture there in 1992. Meanwhile, Mandom took its first step toward the Chinese market, establishing a marketing joint venture in Hong Kong, which later became known as Sunwa Marketing Co. In an extension to its Japanese operations, Mandom acquired the domestic distribution rights to fast-growing French hair care brand Guinot in 1993. In that year, the company's Indonesian operation went public, with a listing on the Jakarta stock exchange.

NEW LEADERSHIP IN THE NEW CENTURY

The next generation of the Nishimura family took over as head of the company in 1995, when Motonobu Nishimaura became company president. Mandom continued to build up its international network. This included a full-scale entry into the mainland Chinese market with the founding of a joint venture manufacturing and distribution unit in Zhongshan city in 1996. By the end of the decade, the company had also added distribution subsidiaries in Malaysia and in South Korea. The late 1990s also saw the launch of a number of new product lines, including the System E/O line of skin care treatment for women, and Michiko London, a brand family specifically destined for the convenience store circuit.

Into the early 2000s, Mandom continued to seek out new product markets. The company launched the Gatsby range of men's hair coloring products in 2001, becoming the first in Japan to market hair coloring specifically for men. The success of this range soon spilled over into other Asian markets—highly influenced by Japan's bouyant consumer culture—and by the end of 2001, the company had launched hair coloring manufacture at its plants in China and Indonesia, as well as in Japan. The Gatsby line and the Lucido brand were launched internationally in 2002. The success of its men's hair coloring products, in the meantime, encouraged the company to develop a range for the women's market as well. This led to the launch of the Lucido L Prism hair coloring range in 2003.

Into the middle of the decade, the company's growth was backed by a shift of its shares, first to the Tokyo exchange's secondary market in 2002, and then to its main board in 2003. The increase in capital became part of the company's new medium-term objectives, established as part of its eighth mid-term plan launched in 2005. Under the new plan, Mandom now set an objective to expand its international presence still further, especially by establishing the Gatsby and Lucido brands as its flagship global brands.

KEY DATES

1927:: Shinpachiro Nishimura founds the Kintsuru Perfume Corporation to produce personal care items for the Japanese market.
1933:: The company finds its first major commercial success with the launch of its Tancho Tique "hair control" stick.
1958:: The company makes its first move into the international market with a cooperation agreement in the Philippines.
1959:: The Kintsuru Perfume Corporation becomes the Tancho Corporation.
1969:: Tancho launches a joint venture in Indonesia, which becomes a major company manufacturing center.
1971:: After the successful launch of Mandom men's care brand family, the company becomes the Mandom Corporation.
1982:: Mandom initiates its first medium-term plan as part of a change in management culture.
1988:: The company enters Singapore through a joint venture as part of international expansion effort and begins trading shares on Tokyo exchange's over-the-counter market.
1996:: Mandom establishes a production and distribution joint venture in mainland China.
2003:: Company shares are listed on the Tokyo Stock Exchange's primary market.
2005:: The company launches its eighth medium-term plan with a goal of establishing Mandom and Lucido as flagship global brands.

At the same time, Mandom continued to seek out new product areas. Into the mid-2000s, the company had developed a line of paper-based toiletry items, such as face and hand wipes. The effort to build this category hit a snag in mid-2005, however, when the company was forced to pull advertising for a facial wipe that had come under criticism for its racist content. Nonetheless, Mandom could look forward to its continuing success as one of Japan's most popular brands. At the same time, the company had succeeded in establishing a strong international presence. By 2006, foreign sales accounted for some 25 percent of the group's total sales.

PRINCIPAL SUBSIDIARIES

Beaucos Corporation; Guinot Japan Corporation; Mandom Business Service Corporation; Mandom Corporation Latin America Imp.E Exp. Ltda; Mandom Corporation(Singapore) Pte Ltd.; Mandom Corporation (Thailand) Ltd; Mandom Korea Corporation; Mandom Philippines Corporation; Mandom Taiwan Corporation; Mandom (Malaysia) Sdn. Bhd.; Piacelabo Corporation; Pt Mandom Indonesia Tbk; Sunwa Marketing Co., Ltd. (Hong Kong); Zhongshan City Rida Fine Chemical Co., Ltd. (China).

PRINCIPAL COMPETITORS

Sunstar Inc.; Kao Corporation; Shiseido Company Ltd.; Sankyo Company Ltd.; Eisai Company Ltd.; Kanebo Ltd.; Taiyo Nippon Sanso Corporation; Yakult Honsha Company Ltd.; Kose Corporation.