The cosmetic company has built its first domestic factory in 36 years in Otawara, a small town in Tochigi Prefecture. Shiseido hopes the move will allow them to cash in on the growing global trend for “Made in Japan” cosmetics.
However, Japanese cosmetics face huge competition from other established brands such as MAC and L’Oréal, not to mention the rise of the ‘K-beauty’ trend from its neighbour, South Korea.
Japanese cosmetics trend gaining popularity
Cosmetic exports from Japan are doing very well globally. The total revenue generated has almost quadrupled since 2013 to 546 billion yen, two thirds of which go to China and Hong Kong.
The domestic industry is also benefitting from increased tourism to Japan ahead of the 2020 Tokyo Olympics. This is in part due to a relaxing of visa requirements for Chinese visitors who follow Japanese cosmetic trends.
Shiseido CEO, Masahiko Uotani, said a focus on high-end markets and attention to detail sets their company apart from other foreign brands.
“We are focusing on prestige, premium brands. Consumers in those categories see the value of Japanese culture. And that is becoming a very important competitive value.”
A drop in the value of the yen has made localising production more profitable.
Domestic production becoming a more attractive prospect
A drop in the value of the yen has made localising production more profitable for Japanese manufacturing companies.
Shiseido has plans to open a further two factories in its home country before 2022, a total investment of which amounts to 120 billion yen. As the company continues to move with the times, the three new Shiseido factories will be equipped with the latest in Japanese technology, including advanced robotics and artificial intelligence.
The new plant at Otawara will create 1,000 jobs, making the company the largest private employer in the town. The facility, which was constructed on wasteland that was once used for earthquake drills, is also well placed in an area known for its high-quality water – a vital ingredient in the making of cosmetics.
Shiseido is not the only Japanese company moving home
Shiseido isn’t the only business to see the benefit in moving production back to Japan. In 2017, Kose Corp sold up its operations in China and moved back to its home country.
The gamble on high-cost, high-quality domestically produced goods appears to be profitable as cosmetics with the ‘Made in Japan’ tag are winning over consumers in both Asian and western markets.
However, one downside is that such attention to detail means development and quality checks take a long time to reach finished-product status. For example, Japanese firm Kao introduced a “spray-on skin” – which is the world’s first of its kind – but it took them 10 years to bring it to the market.
Do you use the “Made in Japan” tag with your products? Or could your brand benefit from adopting this clever marketing strategy? Let us know in the comment section below.
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