The technical alliance with L’Oréal (1963)

Choosing to let the foreigner in and learn

Rather than shut the foreign company out, take it inside and learn from it. Kobayashi Kosé’s choice in May 1963 rests on that single point. Shiseido, the industry’s largest firm, rejected acquiring a local company even when it entered the United States, choosing instead to set up its own subsidiary and sell under the Shiseido name. KOSÉ, seventeen years old, did the opposite: it signed a technical alliance with what would become the world’s largest cosmetics company and held the relationship for thirty-eight years. Cosme Decorté in 1970 and the 1980 Deming Prize — the first won by a cosmetics maker’s plant — are both results reached partway through those thirty-eight years.

The relationship, though, did not run one way. For L’Oréal, 1963 was also the year it landed in Japan, and by placing its partner’s brands alongside its own in its distribution channels KOSÉ was welcoming into the domestic market a competitor that would later grow on its own. When the alliance ended thirty-eight years on, L’Oréal Japan described it as “buying back the shares from KOSÉ.” What the price of partnering with a foreign firm in order to learn actually was appears in that choice of words.