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Quality cosmetic OEM eyes overseas expansion

Interview - June 30, 2016

Major international partners rely on Toyo Beauty Co., Ltd. to provide comprehensive OEM cosmetic contract manufacturing services, from planning and formulation to production. Its President Ryohei Takimi eplains how utilizing state-of-the-art R&D capabilities to produce high quality ‘made in Japan’ products has garnered the company an expanding client base.



What in your view have been the key factors that have contributed towards the company’s extended success over the last century?

We have a long history of 75 years, and as of July 10th we will be celebrating our 76th anniversary. Within those 75 years, we have been focusing on manufacturing and production. Most of our employees are geared towards the technical side. We started as a manufacturing and selling company, to secure stable production and reduce sales cost, and we switched to the OEM business. We laid down our groundwork as an OEM through the business with Max Factor 43 years ago. At that time, Unilever started stepping forward into the Japanese market; we started manufacturing Unilever’s entire product line from our factory (currently the Innovation Center Central Research Center) in Osaka.

By switching to an OEM format, I can mention several benefits from doing business especially with Unilever. Firstly we achieved more stable management and acquired a more sustainable business model. More importantly, we established a trustworthy image in the industry. Through this collaboration, we are also able to improve our technology, due to our relationship based on trust. After our main factory in Osaka, we created a second one in Tsukuba city, Ibaraki prefecture, in 1990. This was based on one of our ideas, that in order to make our business grow sustainably and from a BCP point of view, it would be necessary to have production sites in both the western and eastern areas of Japan. Our relationship with Unilever is so good as a strategic partner that we purchased and managed their factory in 2001.

In addition to Unilever, we started to work with other businesses and Toyo Beauty’s revenue started growing. Forty years ago, about 90% of our sales were commissioned from Unilever; now this ratio is much lower, and we have greatly diversified our client base. We founded a new factory in Mie prefecture in 1999, opened an office in Tokyo, and started up the Utunomiya factory in 2001. Our performance increased greatly from this point. From 2009 we diversified outside of Unilever and added big names to our portfolio, such as Shiseido and Kosé. This forced our revenues to increase further – all of this of course with permission from Unilever. As of now, we are also looking for new opportunities to ensure our business continues to grow.


How is Toyo Beauty positioned to continue fluid and profitable operations within what is a more complicated domestic and international market today?

The Japanese yen is currently undergoing depreciation. However, since we don’t have factories overseas as of yet, we are not that impacted by exchange rate risks or soaring personnel costs. A few years ago, when the oil prices were higher, our business was being affected, however this is becoming more stable. I’m not thinking of constructing an overseas factory for now; I’ll put it into practice in the near future. The most important thing now is to secure and enhance the domestic production first.


You harbor a strong desire to become the global no.1 in cosmetics contract manufacturing. How does Toyo Beauty keep itself competitive and attractive over other cosmetic OEMs like Cosmescience or Nihon Kolmar example?

As I mentioned just now, we want to focus on the Japanese market, but we also want to further leverage the qualities of the made-in-Japan products. We hope we can do more in the next five years, to directly reach customers abroad. I think that our products’ quality is one of the most important factors.

We also have to make sure that we create the best products to fit our customers’ needs. Since we are an OEM business, we are not working on our own, but alongside and with our customers. Based on their inquiries and requests, we work to produce the most suitable products for them. We always work together with companies, our partners, and this gives us the opportunity of suggesting ideas for new products.

For example, through our research, we can come up with new products for whitening, skin care and propose those to our partners. We are also able to develop new types of materials that can be used as ingredients for new products. If they have good results, they have the potential to be introduced at international and national conferences. This illustrates our great efforts towards R&D, production, and marketing sales.


Can take us through your R&D activities, and some of the ways in which Toyo Beauty is bringing to the market next generation products, which you are either releasing or set to release in the near future?

We have a two-step approach to ideas and innovation. First we propose to our client a concept of new production; once our concept is accepted, we move on toward product commercialized for the next step. This step is not easy – only cultivated development projects that passed various examinations can be commercialized. Through this process, we developed and commercialized our original ingredient, called Funcos C-IS (disodium isostearyl ascorbyl phosphate). Furthermore the ingredient had a skin-lightening effect that acquires overseas patents as a new ingredient.


The value of cosmetics largely depends on how the consumer or business views and understands the product. How important is it for you to educate your customer base about your products and what makes them special?

In the past, the OEM company mission was to produce with accuracy simply. We can provide a one-stop total service, encompassing all the processes of product manufacturing, from marketing support, planning, production, shipment, and sales support. We’ll respond certainly to our customer’s request.


Toyo Beauty has ties in Korea, China and Southeast Asia and importantly in the US, as well as major relationships, such as with Unilever for example. How are you looking to establish more new partnerships with similar giant companies?

We have lots of new projects going on, including overseas companies. We cannot disclose the name of the companies we are currently working together with yet. Furthermore we’re planning to launch our original prescription products all over the world including Asia. We are proceeding at our own pace and have some products coming up probably next May. As a future goal, we are aiming to have 10% of our total revenues come from overseas transactions.


Regarding R&D, what about your ties with universities or educational institutions for the development of new innovative projects and product lines?

We cooperate with some universities for the development of new raw materials. They are responsible for checking the results of the research, testing the compatibility with the human body and whether it is safe or not.


What hopes for future growth are placed on the US market?

As I pointed out earlier, we are involved with big companies for some projects. Actually, one of them is an American company


As you are entering new markets and developing new international business partnerships, how is Toyo Beauty working to build its existing reputation?

We have recently established an international department, and we have started employing more and more people who are knowledgeable about international markets, who are proficient in English and other foreign languages since each country and region has different legislations and requirements. While taking those factors into consideration, we want to expand our business overseas. If we don’t know who our customers are, we cannot do business with them. We also want to open exhibitions abroad. We want Asia to be the first stage.


What is the type of message that Toyo Beauty aims to communicate both to its domestic and wider global audience as it moves into new markets in Asia and in the US?

Our goals are set up already for the next five years. Our aim is to become a company that is reliable, with technology and product development at the central stage of its operation, and we want to be a more valuable partner to our related customers and businesses. We are keen for them to know that we execute on the additional orders and offers that we receive from international companies. We have a challenging spirit; we continue to challenge ourselves to new things. We’ll definitely live up to our clients’ expectations.