Japanese cosmetics firms including Shiseido Co are getting hit by a double whammy in their China business. — Bloomberg
TOKYO: 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 Co 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 waste-water 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 Morningstar.
Competitors like Tokyo-based Pola Orbis Holdings Inc and South Korea’s Amorepacific Corp also saw their third quarter operating profits miss analyst estimates. “A reduction in cosmetics companies’ growth rates is also expected, especially Japanese and South Korean firms that have benefited more than others from China’s expansion,” said Wakako Sato, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co.Sato is the only one among 12 analysts rating Shiseido sell-equivalent, and she ranks No. 1 among analysts covering Japan’s personal-care sector. — Bloomberg.
