Investors say Shiseido Cosmetics Vietnam owes them compensation for losses due to discrimination between SCV-funded, shareholder-funded stores; court action will be taken if company doesn't comply

Lorena Madrigal

LOS ANGELES , November 17, 2011 (Industry Intelligence) – The 15 investors of Shiseido cosmetics products in Vietnam says the new owner, Shiseido Cosmetics Vietnam (SCV) is unfairly supporting its stores while disadvantaging shareholder-funded stores, VietNamNet Bridge reported Nov. 16.

According to the investors, the problems began soon after importer cum distributor and manager Thuy Loc Company transferred ownership to SCV early in 2010.

When SCV took over management it did not acquire the shareholders’ stake in the stores, and in a November 1 meeting the company reiterated its distant relationship with the shareholders: “Shiseido does not bear any tie with Thuy Loc’s partners. Shiseido does not manage business activities in stores operating under the business cooperation contract with Thuy Loc.”

Investors say their stores have been discriminated against because SCV allegedly hopes their hurting businesses will be easier to take over, according to the article.

The investors say although their stores bring in 400-500 million Vietnamese dong (US$19,040-$23,800) in revenue they pay more than 10 million dong for trial products, in contrast to the several billion dong in revenue that SCV stores bring in and their 4-5million dong trial products costs.

Only SCV-funded stores carry promotional programs, resulting in their ever-increasing revenues while shareholders’ stores see drops in revenue, and sometimes even report losses.

According to investor Nguyen Thu Son, a store at Dong Khoi reported a loss of 377 million dong in this year’s first half, a striking drop from the 492 million dong profit it had in 2008, under Thuy Loc’s management. Another store in Thuan Kieu saw profits for the first half of the year dropped to 12 million dong in 2011 from 719 million dong in the same period in 2008, reported VietNamNet Bridge.

SCV said increased location rental fees, input costs, and falling revenues are the reason for the drastic change in financial figures.

Investors insist that SCV owes them compensation for their losses and delayed interest payments, and in early November, the investors submitted a letter to Japan’s embassy to “review the case in a thorough way.” The group added that if SCV does not comply with their compensation demands, it would submit the case to court.

The primary source of this article is VietNamNet Bridge, Hanoi, Vietnam, on Nov. 16, 2011.

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