Acquiring Kanebo Cosmetics: from cosmetics latecomer to Japan’s #2 (2005)

The speed of buying, the slowness of assimilating

At the core of this acquisition is the idea of reaching, in one stroke, the upper tier of cosmetics it could not attain on its own — by taking a specialty-store network and its brands together. For the latecomer Kao, the face-to-face sales base that Shiseido and Kanebo had built over long years looked faster to buy, seizing the opportunity of a bankruptcy, than to assemble by itself over time. Judging from Kao’s pattern of behaviour — moving fast with irreversible hands, the detergent-only line at Wakayama in capital investment and the one-shot processing of the floppy-disk business in withdrawal — the $3.5B (¥410bn) lump-sum acquisition, too, can be seen as a fast move that buys time with money.

But what waited on the far side of the purchase was a domain where speed, if anything, works less well. Between the logic of household goods, which recomposes a business by efficiency and repeatability, and the manners of cosmetics, where dialogue and sensibility at the counter decide value, there was a gap, and Kao at first tried to fill it with the gentle design of keeping the status quo. That caution showed up, ironically, as a delay in integration, and the payback slid back over the years. A company skilled at executing irreversible decisions fast could not reproduce that speed in the integration of people and culture — the Kanebo acquisition remains, even today, worth reading as a case in which the speed of buying and the slowness of assimilating crossed within the same company.