The development of the Asia-Pacific and Chinese markets is not optimistic, and the performance of Japanese beauty products has generally declined. As of February 19, a number of Japanese beauty groups have released their 2023 financial reports. Among them, Shiseido's revenue and profit both declined, Kao Group continued to decline for many years, and KOSE Group's profit fell by ......Under the influence of nuclear sewage and the rise of local Chinese brands, the dilemma faced by Japanese beauty is more complicated than imagined, but this cannot be the reason why they let go of the Chinese market.
The main brand "fell out of favor".
As of February 19, a number of Japanese beauty groups have successively released their 2023 financial reports, and judging from the performance data alone, the situation of Japanese beauty is not optimistic.
The Shiseido Group's full-year net sales for 2023 were 973 billion yen, down 8. year-on-year8%；Operating profit was 28.1 billion yen, down 39.0% from the same period in 20226%。Kao Group will continue its declining performance in 2023, with net sales of 1,532.6 billion yen, down 12%；Net income was 43.9 billion yen, down 49%. In 2023, KOSÉ Group's revenue will be 1438.5 billion yuan, a year-on-year increase of 39% and operating profit of 96.7 billion yuan, down 287%。
The impact of nuclear sewage and the unoptimistic performance of the Chinese market have become the common reasons for the decline in the performance of the above-mentioned companies. In its earnings report, KOSÉ Group cited "a slowdown in consumption and resistance to the travel retail channel due to rumors of nuclear sewage discharge" as one of the reasons for the decline in performance.
In 2023, Shiseido Group's sales in the Chinese market will decline by 5%, of which the travel retail segment will decline by 20%; Kao Group's sales in Asia were 222.6 billion yen, down 56%。The KOSÉ Group's sales in the Asia-Pacific market were 52.7 billion yen (about 25.7 billion2.4 billion yuan), down 347%, and the sales of travel retail channels were 26.5 billion yen (about 12.5 billion6.9 billion yuan), almost halved.
Wu Daiqi, CEO of Shenzhen Siqisheng Company, said that daily cosmetics brands like Shiseido were greatly affected by the nuclear sewage discharge incident. Skin care products are products that consumers have been in contact with for a long time, and they are highly substitutable, and once consumers have concerns about the production place or raw materials of the product, it is easy to seek domestic brands or European and American brands for replacement.
It seems to be a fact that Japanese beauty products are not selling well in the Chinese market. According to public data, in October 2023, the sales of a number of Japanese products on the JD platform declined, with Shiseido down 23% year-on-year, Key to Skin 38% year-on-year, Kerun down 57% year-on-year, and Decorté down 65% year-on-year.
In its financial report for the first three quarters of 2023, Kao Group disclosed that "due to the decline in sales in the Chinese market, Kerun's sales fell by 30%".
In addition to the decline in sales, there has been a dive in **, and the image of Japanese beauty in the eyes of consumers has been discounted. Consumer Xiaoyu said that a few years ago, the 50ml red waist in his hand was more than 600 yuan, and now Walmart 120ml only needs 598 yuan, and Li Jiaqi's 50ml live broadcast room is now only 370 yuan. "Other brands have increased their prices many times a year, ** more expensive every year, only Shiseido gives more than a year. Xiaoyu teased. In addition to the red waist, Shiseido's other brand, Elisel's, has also dropped sharply. Consumer Aban said that the Yilisier water milk bought in 2019 will cost more than 500 yuan in the domestic market, and now the ** of 209 yuan is really a big dive. Consumer Tian Tong said that Elisil is too cheaper, and the classic Youhuoyan series can now be cheaper by more than 200 yuan.
The current "can't sell" is in stark contrast to the moment when these companies were once very competitive in the Chinese market. In the past, Shiseido's Red Waist, Kose's Decorté, and Kao's Kerun all occupied a certain position in the Chinese market.
In 2021, Kerun, endorsed by Luhan, ranked first in the brand popularity list, and the brand popularity increased by more than 100 times. Shiseido's red waist once sold 5,000 orders within 3 minutes in Li Jiaqi's live broadcast room on "6.18" in 2019, and the sales of single products exceeded 6 million yuan, setting a record. In 2021, the "Double 11" Red Waist Essence became one of the few single products of Shiseido that exceeded 100 million yuan. COSE Group's DECORTÉ will achieve revenue of 96.2 billion yen (about 49 yuan.) in 20225.4 billion yuan), supporting one-third of the revenue share.
On performance-related issues, a reporter from Beijing Business Daily interviewed Kao Group and Shiseido, but did not receive a reply as of press time.
Brand aging and staggered competition.
Despite the complex situation brought about by nuclear sewage and changes in consumer demand and market competition, they do not want to give up the Chinese market so easily.
Shiseido President and CEO Masahiko Uotani once said, "The 2023 Japanese treatment water discharge incident has had a serious impact on cosmetics sales. But I think the impact will subside in early 2024, and the Chinese New Year is an opportunity. China has hundreds of millions of people who buy high-end cosmetics, and we will focus on the best products. At the end of December 2023, Shiseido established a new investment company and said that it would invest and cooperate based on the emerging consumer demand in the Chinese market, and make in-depth investments in the fields of recombinant collagen and oral beauty.
Kao Group also said that it will increase its layout in the Chinese market. In October 2023, the Kao Group's Sensai brand opened a brand experience space in Shanghai to provide a unique brand experience space to high-end consumer groups. On January 24, Kao (China) R&D Center, together with the Cosmetics Committee of Shanghai Pharmaceutical Industry Association, held a kick-off meeting of the Ceramide Special Research Group to deepen communication at the scientific and technological level for the brand. The KOSÉ Group has also increased its investment in the Chinese market. KOSÉ Group has previously stated that it values the growth of the Chinese market and travel retail, and has already expanded its presence on multiple e-commerce platforms in China to strengthen the competitiveness of its e-commerce channels, and will continue to focus on this initiative in the future.
It's not without reason that Japanese beauty can't let go of the Chinese market. The Chinese market, once Shiseido's largest market, supported its rapid growth. In the first half of 2021, Shiseido's China market grew by 441% to promote Shiseido to achieve 177% growth. In the first half of 2022, the Chinese market became Shiseido's largest market, with net sales exceeding Japan's 1,156600 million yen (about 57 yuan.)8.8 billion yuan), ranking first in the global market. Kao Group's diapers once accounted for 15% of the Chinese market7%, which once ranked second, became the cash cow of the Kao Group.
According to public data, the market size of China's cosmetics industry in 2023 will be about 51690 billion yuan, a year-on-year increase of 64%, which is expected to increase to 5,791 in 20250 billion yuan. Under the scale of 100 billion yuan, not only Japanese beauty is unwilling to give up, but also European and American brands such as L'Oreal and Estee Lauder are also stepping up their layout.
Wu Daiqi said that it has become a major trend for Japanese brands to be cold in China. To a certain extent, the transformation and development of enterprises can avoid competition with local brands and obtain higher profits in performance, but enterprises may not have a great chance of winning, because there is a certain brand aging phenomenon for brands such as Shiseido, and young consumers may not think that they are high-end mainstream brands, and they do not have a great advantage compared with European and American brands.
According to public data, in 2023, in the TOP20 report card of the "Double 11" full-cycle brands in the beauty industry announced by Tmall, the top 10 are Proya, L'Oreal, Lancôme, Estee Lauder, Winona, La Mer, etc., among which local brand Proya surpasses L'Oreal, Estee Lauder and other big brands to occupy the top spot. Winona also entered the top 10 list, and the competitiveness of domestic beauty brands has been strengthened in the gradual transformation and development. In addition, L'Oreal, Estee Lauder, Procter & Gamble, etc. are also stepping up their layout, which is undoubtedly a challenge for Japanese beauty.
Jiang Han, a senior researcher at the Pangu Think Tank Research Institute, said that in terms of the development process of China's entire beauty market, with the rise of domestic brands and the competitive layout of other brands, the popularity of Japanese cosmetics is much less than before, and even not only Japanese cosmetics, but other foreign brands are also facing these problems.
Beijing Business Daily reporter Guo Xiujuan Zhang Junhua.