After years in the shadow of K-Beauty trends, is 2018 the year of the Japanese beauty comeback? South Korea may be the show pony of the region for its technological advancements and quirky cosmetic concepts, but the country now faces stiff competition from ambitious Japanese brands.

Scores of Japanese brands are leaving the comforts of home, which is a healthy domestic market that boasts the highest per capita spending in beauty products, and venturing into Europe and the US, and taking market share from other Asian competitors.

In fact, Japanese cosmetics exports surpassed the value of imports for the first time in 2016. In 2017, Japan exported $2.6 billion worth of beauty products, up 32% year-on-year from $1.99 billion in 2016, according to the Ministry of Finance. Hong Kong and China accounted for nearly $1.5 billion of the 2017 total. Exports to China alone nearly doubled (+98%) from $365 million to $723 million.

According to Sunny Um, a research analyst at Euromonitor International, those Japanese premium skin care brands that were the most active in overseas expansion (such as SK-II, Shiseido and Kosé’s Sekkisei), are giving global prestige giants including Estée Lauder and Lancôme a run for their money.

“These brands have registered significant sales not only in their home country but also in China, Hong Kong, South Korea, Malaysia and even Vietnam,” Um told this publication earlier in the year.

J-Beauty Builds in Asia
Jorge Larrananga is deputy director of Japanese cosmetics brand Number Three. He left Madrid, Spain for Japan to complete his PhD, and has since accumulated more than 10 years of experience in natural and organic cosmetics in the Asia-Pacific region. He tells Happi that while there is much talk of a J-beauty comeback in the West, the greatest growth is closer to home.

“Western media has been reporting in the past six months about the J-Beauty comeback, or how it is gaining market share against K-Beauty, particularly in the US. However, Japanese beauty has enjoyed a comfortable position in the prestige segment, so rather than a comeback, we are observing an increase in sales in Asia, particularly from China,” he told Happi.

In 2016, Asia accounted for 93% of Japanese cosmetics exports, compared with 83% in 2012, according to Yano Research data. This growth, said Jorge, is driven largely by repeat purchases by Asian tourists on their return home from Japan.

“The huge increase in tourist numbers from Asian countries explains partly the increase in exports to Asia,” said Larrananga.

Catering to Consumers
According to data Jorge recently presented at In-Cosmetics Korea, 7.35 million Chinese tourists visited Japan in 2017, compared with 6.3 million the previous year. 

“Tourists get access to different brands while visiting Japan, and after they return to their home countries they continue purchasing the products,” he explained.

What’s more, Jorge estimates that per capita cosmetics spending in Asia, based on data from Nomura, Euromonitor International, Mintel and the UN Human Development Index, has increased to approximately $60 in 2017—driven by factors such as the steady improvement of living conditions in Asia, greater life expectancy, an increase of middle-class purchasing power and greater mobility.

“Japanese manufacturers are aware of this new purchasing force, and they have been offering tailored products to overseas consumers, changing product packaging design and logos to be more ‘foreign-friendly’ as well as providing services in multiple languages,” he added.

The high quality and performance of Japanese products, as well as the inclusive approach to marketing of Japanese brands—focusing on a wide age range of customers—also explains the success of Japanese cosmetics in Asia.

“Big Japanese companies are increasing their efforts to bring product ranges that were only available in Japan to different markets, increasing their presence in key point markets and using already established subsidiaries in the region to access new markets,” Larrananga revealed.

And to specifically cater to Chinese consumers, many Japanese cosmetics distributors are increasingly employing dedicated e-commerce sites on their own or with Chinese partners, to take advantage of free trade (Read: Enter, China on Happi.com).

China aside, Jorge pinpointed Singapore, Hong Kong, Taiwan and Indonesia as markets of future potential growth for Japanese brands.

“We expect to see growth in these markets due to the introduction of new Japanese cosmetics brands that in the past were available only in Japan,” he said. “Indonesia is a market with a huge potential mostly untapped, where Japanese masstige brands could perform well.”

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Michelle Yeomans
Freelance Journalist
Email: [email protected]

Michelle Yeomans is an award winning multimedia journalist. She has been reporting on cosmetics industry movements in EMEA, US and Asia for five years and has won an award for her coverage of the complexities of operating in the Middle East. Michelle’s passion lies in tracking the beauty culture and trends of the Asia Pacific region. Ever the AV enthusiast, she also relishes the opportunity to create engaging video and podcast content for the B2B industry.