Kao Corporation

Kao's mission is to contribute to the wholehearted satisfaction and the enrichment of the lives of customers and employees throughout the world. We will accomplish this by drawing on our creative and innovative strengths to develop products of excellent value and outstanding performance. Fully committed to this mission, all members of the Kao Group are working together as a single corporate force to win the loyalty and trust of their customers. Kao Corporation, often called the Procter & Gamble of Japan, is one of Japan's leaders in personal care products, cosmetics, laundry and cleaning products, hygiene products, and bath additives. Kao also manufactures and markets fatty chemicals, edible oils, and specialty chemicals, and is one of the world's leading suppliers of information technology products and services. The company has operations in 26 countries in Asia, North America, Europe, and elsewhere. Founded in 1887 as Kao (face) Soap Company, Ltd. by the Nagase family, the company introduced its first soap product in 1890, selling it with the motto "A Clean Nation Prospers." That same year Kao adopted its crescent-moon logo, which was similar to Procter & Gamble Co.'s logo registered eight years earlier; thus began a longtime rivalry. By the end of the 1920s, Kao had developed coconut alcohol-based synthetic detergents, and after World War II, began manufacturing heavy-duty detergents. Kao's early success was made possible not only by its dedication to R&D but also by its unique network of proprietary wholesalers. In the early 1960s the company persuaded its wholesalers to establish jointly owned companies, called hansha , which would exclusively distribute Kao products. This system greatly simplified the usually complicated way that products moved from manufacturers to consumers in Japan, and provided Kao with competitive advantages, such as getting products onto store shelves faster and maintaining lighter inventories. In 1971 Yoshio Maruta became president of Kao and continued the company's emphasis on R&D. Maruta, holder of a doctorate in chemical engineering and 16 patents, invented a process for producing aircraft lubricant from vegetable oil during World War II, when Japanese supplies of petroleum were low. An aggressive and charismatic leader, Maruta often was criticized for his domineering style that left little room for open discussion. He had a fierce respect for consumers, however. As one of his assistants told Forbes , July 25, 1988, "You can cheat housewives once, but not twice." Beginning in the early 1970s, when Procter & Gamble entered the Japanese market, Kao faced increasing competition at home from foreign companies. One of the company's responses to the encroachment of P&G, Unilever NV, and others into its home market was to turn the tables on the foreigners by aggressively expanding overseas itself. Kao began making serious moves into the U.S., European, and non-Japanese Asian markets in the late 1980s. The company's timing seemed particularly fortuitous when the Japanese bubble economy of the 1980s gave way to the prolonged recession of the early 1990s. Nonetheless, Kao's overseas ventures met with only mixed results. In 1988 Kao acquired the Andrew Jergens Company, headquartered in Cincinnati, Ohio, and placed it within its main U.S. subsidiary, Kao Corporation of America. High Point Chemical Corporation, a specialty chemical company based in North Carolina that was acquired in 1987, supplied the raw materials for the Jergens toiletry and skin-care products. A move into Germany was made in 1989 when Kao purchased a 75 percent interest in Goldwell GmbH, a manufacturer and marketer of hair-care and beauty products through professional hairdressers around the world. These acquisitions greatly increased the amount of revenues Kao generated outside Japan (to about 20 percent by the mid-1990s), but the company encountered difficulty building upon the acquired firms' previous successes. Jergens, for i