Industry Watch: Chinese Cosmetic Brands In Japan

Consumer Staples Author: Yiran Xing Sep 21, 2022 09:58 PM (GMT+8)

As the third largest cosmetics market in the world, Japan is full of business opportunities for Chinese cosmetic brands.


Often said to be an ideal springboard to succeed in the global marketplace and the third largest cosmetic market, Japan has a mature economy with the highest retail prices for cosmetics, making it an important destination market for Chinese cosmetic brand exports. Although the growth of the Japanese economy is weak, Japan can be a remarkable growth driver for Chinese cosmetic brands, given the extent of its market.

The strategic decision of internationalization is not one to be taken lightly: it is full of difficulties to overcome, that can emerge from cultural misunderstandings, consumer misknowledge, market structure differences, hidden opportunities, etc. The main purpose of this series is to cover these difficulties by providing Chinese cosmetic brands a comprehensive analysis of the Japanese beauty market, highlighting the obstacles and opportunities. To achieve this, this series will attempt to answer the following questions:

  • What is the current state of the Japanese cosmetic market?

  • What are the strengths and weaknesses of Chinese beauty brands in the Japanese market?

  • How to successfully enter the market?

Three types of Chinese cosmetics brands in the Japanese market

Through interviews and research, Equalocean summarized three genres of Chinese cosmetic brands in Japan.

The first is the brand that naturally has the potential to be a hit in Japan, such as Florasis (Chinese:花西子) and Girlcult. These two brands both belong to sweet and lovely styles, which are consistent with the typical Kawaii culture in Japan. Therefore, the popularity of the brands in Japan and the acceptance of Japanese consumers are high.

The second type is the brand with a strong Chinese style, and Florasis is a typical representative. Florasis is popular in the Japanese market due to the similarities of Chinese and Japanese cultures and the brand's classical Chinese beauty features. Before Florasis, many products of Catkin (Chinese:卡婷) and Zeesea (Chinese:滋色) also had the characteristics of ancient Chinese style, but at the beginning, products like carved lipsticks were considered a little pompous. But after two or three years of market education, Japanese consumers have gradually become more receptive to this type of product.

The third one is " borderless beauty brands". For example, although the popular brand 3CE is a Korean brand, it does not look particularly different from local Japanese brands. Chinese brands Perfect Diary (Chinese:完美日记) and Colorkey (Chinese:珂拉琪) belong to this type. The borderless feature is a double-edged sword. Although consumer acceptance will not be low, it means that the brand lacks clear recognition and positioning in the early stage, so the brand's appeal to users and consumer loyalty to the brand is limited.


The current state of the Japanese cosmetic market

1)Market Overview

Japan is the world's third largest cosmetics market, with a market scale of CNY 150 billion. Among them, Shiseido, Kao, Gaosi, Pola Orbis and other Japanese local brands account for nearly 40%; P&G, L'Oreal, Estee Lauder and other European and American brands account for nearly 30%; The remaining 30% of the beauty market is composed of other niche brands, Korean brands, Chinese brands and other foreign brands, with a share of about CNY 50 billion. Among the CNY 50 billion market, Korean brands are doing well. This year, the annual GMV of one or two brands is estimated to exceed CNY 500 million. By the end of 2022, Korean beauty brands are expected to reach 5 billion in market sales. The sales volume of Chinese cosmetics brands in the Japanese market is about CNY 600 million, but this does not represent the future scale, just because Chinese brands have not yet fully developed in the Japanese market. It is estimated that the share of Chinese brands in the Japanese market will increase four to five times in the future. Therefore, the high-barrier Japanese market has enough competition space for Chinese cosmetics brands to think and explore.

MoldBreaking focuses on the beauty industry and provides the integrated D2C solution for Chinese brands going to Japan.

In an interview with Equalocean, MoldBreaking's founder Guo Ruiruo pointed out that the Japanese market has three major characteristics. First, there is a greater demand in the market. Chinese makeup has been prevalent in Japan for two years, and the attributes of the cosmetics industry's natural close connection with social media platforms and Japanese consumers' love for Chinese makeup have led to a large number of videos imitating Chinese makeup spreading in the Japanese market, leading to a large demand in the market. Second, the Japanese market is active, with small increment but large capacity. Therefore, the Japanese market can give new brands more opportunities for development. Third, the current Japanese e-commerce market is equivalent to the stage when Taobao, China's head e-commerce platform, first rose to prominence 10 years ago. Therefore, Guo predicts that the Japanese e-commerce environment will definitely change very significantly in the next few years.

2)Differences between Chinese market and Japanese market

Guo Ruoxi believes that the Chinese market is different from the Japanese market in three aspects: customers, channels and brands.

In the Chinese market, e-commerce platforms are dominant, and brands and users are cut by different platforms. China's top e-commerce platforms include Tmall, Jingdong and Jindo, which have large traffic and well established rules within the platforms, and brands and users trade under the platform rules. In contrast, Japan's offline economy is very strong, with more than 90% of sales channels relying on offline. Although there are also platforms such as Amazon and Rakuten in Japan, at least in the beauty industry, such e-commerce platforms do not account for a high percentage of sales, and the platform is only one of the perception and purchase channels for Japanese consumers.

In addition, the attitude of Chinese and Japanese consumers and brands towards discounting activities is diametrically opposed. Chinese brands invest a lot of budgets for shopping festivals like 618, and consumers are indeed attracted to buy-one-get-one-free, coupons and other offers to place orders. But this is a somewhat unconscionable behavior for Japanese brands and consumers. Japanese brands are more interested in long-term effects and will not be keen to launch various discount activities.

Bottom Line

EqualOcean has always focused on serving Chinese companies to globalize and helping overseas companies and organizations to seize the growth opportunities in China. We believe in the value of globalization and our mission is to connect China with the world. In the next article of this series, EqualOcean will continue to analyze the different channels and business strategies of Chinese cosmetic brands entering the Japanese market.