Kao Group recently announced the plan of integration of its cosmetic brand Kanebo as the leukasmus scandal expands. Daily Economic News reported.

Kao's plan is basically a sectoral integration which involves Kanebo's many sectors as production, development and sales. It will start in January 2014. If the integration succeeds, Kanebo will lose its operational independence and become a pure brand management company of the Kao Group.

The official website of Kao Group says that in July 2014, Kanebo Odawara Institute will be renamed Kao Odawara Institute, while Kanebo Kao cosmetics Odawara factory will be transformed into a new 100 percent owned manufacturing enterprise as the backbone of the Kao Group's cosmetics production factory, promoting the progress of integration.

In addition to the already planned merger of research and production departments, Kao also plans to integrate the sales department, but it will keep the brand of "Kanebo." "The sales department is also considered for integration reforms. We hope to build a Kanebo brand management company through reforms," information on the Kao's official website shows.

Kao acquired Kanebo in 2006 but, as Kao's wholly owned subsidiary, Kanebo is still an independent company. However, the leukoplakia scandal caused by Kanebo's whitening cosmetics has made Kao to adjust Kanebo's jurisdiction.

Many insiders say that if Kanebo's rights in those sectors are withdrawn, then it can no longer call the shots in many ways.

Kanebo is the second-largest cosmetics company in Japan and its products are sold in more than 50 countries and regions worldwide. It entered China in 2005, and maintained a high growth rate.

"The decision is made by the headquarters but at present there is no structural change in the Chinese market," a staff member at Kanebo China said. Kao China has not yet made any comment on this.