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Business Trends

Japan's cosmetics exports hit fifth straight annual record

Uptrend likely to continue as 'visits to Japan' lead to 'buying made in Japan'

Shiseido moved the production of Elixir skin care products for the Chinese market from Vietnam to Japan.

TOKYO -- Japan's cosmetics exports jumped 39% to 371.5 billion yen ($3.48 billion) in 2017, marking a fifth straight record year, as inbound tourism creates new devotees who continue to use the products long after returning home.

The Nikkei compiled the annual tally based on trade data on 16 types of cosmetics, including skin toner, lipsticks and hair care products. The export value hovered in the 100 billion yen range in the early 2010s but has increased sharply since 2015, more than doubling in the past three years and topping 300 billion yen for the first time last year.

Some 90% of the exports went to Asian markets, including top destinations China, Hong Kong, South Korea, Taiwan, Singapore, Thailand and Vietnam. The U.S. and France were also high on the list.

Visitors exposed to high-quality Japanese cosmetics here often keep using them after leaving, finding the items at local department stores and online. Shiseido says half of Chinese customers who buy the company's products while visiting Japan continue to purchase them even after they get back to China.

Existing-store sales at department stores in Japan climbed 17% last year, propelled by visitors shopping for cosmetics. And the economic impact of visitors seeking Japanese products and culture after departing is significant. Japanese exports of toiletries including face wash and toothpaste to the rest of Asia are on the rise amid burgeoning inbound tourism.

Japanese cosmetics makers used to focus on selling locally produced cheaper offerings in greater Asia, but some have modified their strategies. Shiseido, for instance, last year moved the production of its Elixir skin care line, which is popular in China, from Vietnam to Japan. "We will bring to the forefront the power of 'made in Japan,'" mainly for high-end products, President Masahiko Uotani has said.

Similarly, Kose said last year it would sell off its only plant in China, deciding to supply the market with imported products from Japan. The company positions the Sekkisei skin care line favored by visitors as a key made-in-Japan brand. In cosmetics stores in China, the products have been sold in dedicated sections since the end of last year.

Japan's cosmetics exports are expected to keep climbing this year and beyond. As income levels rise in China, price points of popular cosmetics there are ascending. Another tailwind was provided by China's decision in November to reduce customs duties on cosmetics, which has resulted in duties on some items being halved.

Japanese cosmetics companies are scrambling to boost domestic production capacity so as not to miss out on the opportunity to capture brisk demand abroad. Big players' factories are already running at full capacity, and supply for even the home market has been tight. Shiseido plans to open factories in Tochigi and Osaka prefectures in the coming years, while Kose has been working on bolstering capacity at a plant in Gunma Prefecture.

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