As companies battle to grab a bigger share of Asia’s growing cosmetics market, they’re receiving an unhappy reminder that relying too much on sales in China can come back to hurt them.
Japanese cosmetics firms including Shiseido are getting hit by a double whammy in their China business: a slowdown in the world’s second-biggest economy and calls by online users for a boycott of Japanese products to protest the release of treated wastewater from the Fukushima nuclear power plant.
Shiseido shares tumbled the most in 36 years on Monday after it slashed full-year profit forecasts on sluggish China demand. Around 25% of Shiseido’s sales are in China and 80% of travel retail — purchases at duty-free shops and on transports — were made by the nation’s customers, according to investment research company Morningstar. Competitors such as Tokyo-based Pola Orbis Holdings and South Korea’s Amorepacific also saw their third-quarter operating profits miss analyst estimates.