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Economy

Abenomics helps makeup market growth

TOKYO -- Cosmetics are a good indicator of economic sentiment among women. The Nikkei recently interviewed Shiseido Chairman and President Shinzo Maeda to learn how the cosmetics market has fared since the introduction last year of "Abenomics," as the prime minister’s policies to stimulate growth are known.

Shiseido Chairman and President Shinzo Maeda

Q: Has Abenomics brought any change to the cosmetics market?

A: Recent developments in the cosmetics market indicate the economy is moving away from deflation.

     Until 2012, the per unit price of cosmetics products kept falling, including for strong selling products. This changed last year, with the growth in yen-term sales exceeding the increase in unit-term sales often.

Q: Have you seen any change in consumers' taste?

A: Sales of pure red lipsticks have increased strongly. Pink and rose lipsticks are quiet and safe, but bright red products that stand out began selling well. We saw a similar trend back in the bubble era during the second half of the 1980s.

Q: Do you think Japan's economy will improve in a smooth manner?

A: There is no doubt demand will spike before the consumption tax rate hike in April, and tank once it is raised. Overall, the impact on sales will be zero, as the ups and downs will cancel each other out.

     High-priced items will sell well in the lead up to the tax increase. Then, sales of not only high-priced items but also midrange and cheaper products will be adversely affected afterwards. This blowback from the consumption tax rate hike will likely continue for three to four months, or six months at the most.

     The tax increase could depress entire economy, so the government is looking to implement major countermeasures. Whether businesses of all sizes can pass the tax increase onto customers through pricing is key. If this hurdle is cleared, the Japanese economy will on a secure growth path.

Q: How is demand outside Japan?

A: Emerging countries in Asia will continue to be the growth engine. But the explosive market expansion of the past is giving way to solid growth in countries such as India and Indonesia.

     China is the case in point. The country was achieving economic growth of around 10% until several years ago. The pace has now fallen to below 8%.  Having said that, the Chinese cosmetics market is still outgrowing the overall economy by 1 to 2 percentage points, expanding at the annual rate of about 10%.  This pace will continue for a while.

     The number of people who use cosmetics products in everyday life stood at 140 million in 2011 in China. The figure is expected to reach 330 million by 2020.  So, the Chinese market will remain highly important.

Q: Was Shiseido negatively affected by the anti-Japan demonstrations following the 2012 nationalization of the Senkaku Islands?

A: Back then, our sales counters were destroyed. And running sales campaigns was out of the question.

     Even now, we are not completely free of the negative impact.  Customers hesitate to buy our products.

     But even in 2012, the impact was small in some provinces in the coastal area. As China became wealthier, people's values became more diversified. We used to target all of China in sales efforts, but we now focus on areas where stable demand can be expected.

Interviewed by Nikkei senior staff writer Tadanori Yoshida

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