INTRODUCTION

IN THIS CHAPTER, I wish to examine the motives and strategies of Kao Corporation Limited in its entry into Europe and discuss the problems of adaptation which may be encountered in this process. Kao was one of the first soap manufacturers in Japan. It has a history of almost one hundred years and is a leader in marketing and advertising. Moreover, it has been a keen investor in research and plant equipment in the areas of oil and fat, surface, and polymer sciences and has proceeded with a rapid diversification to cover the production of detergents, cosmetics, disposable nappies, toners, floppy disks, etc. The change of the official company name in 1985 from ‘Kao Soap Company’ to the present ‘Kao Corporation’ is, incidentally, one sign of this strong diversification drive.

My primary reason for examining the case of Kao was the strong impression made, while I was engaged in completing the company's centennial history, by the marked development in international activities recently set against the general managerial development of the company. Another reason was the easy facility to information sources. But these were not my sole reasons. The entry of Japanese chemical firms into European markets is less apparent than that of electric appliance or car manufacturers. Consequently, chemical firms are not yet at the center of the trade conflict, and problems in adaptation have not yet become evident. However, since Kao actually represents the case of a firm which is making an entry on the strength of its managerial as well as its technological superiority, it is likely that the adaptation problems discussed below will prove to be even more significant. Kao, in this sense, provides interesting material as a case study of localization and of the adaptation attempts of Japanese firms in Europe.

WHY EUROPE? THE DEVELOPMENT OF OVERSEAS ACTIVITIES

From the periphery to the center and diversification

Already before the Second World War, Kao had set up manufacturing centres throughout East and Southeast Asia. However, these were lost with the Japanese defeat and bear no direct relation to present development. The new starting point after the war dates from 1955 with the resumption of exports of household products to Southeast Asian markets.