Korean brands scaling down in Japan due to weak Yen

By Michelle Yeomans

- Last updated on GMT

Korean brands scaling down in Japan due to weak Yen

Related tags Japan

While more and more Japanese cosmetics brands see value in Korea’s markets, Korean companies are scaling down their business in Japan, due to the weak yen.

In 2013, the Japanese government introduced policies to devalue the Yen after 15 years of persistent deflation, vastly increasing the money supply which has caused the currency to weaken to over 100 to a dollar.

AmorePacific, which started its cosmetics business in Japan in 2006, withdrew from the market last year.

According to the Korea Herald, the personal care player's sales in Japan decreased from 47.6 billion won (US$42.8 million) to 45.7 billion won (US$41.1 million) between 2012 and 2013, with an operating loss of 3.9 billion won (US$3.5 million).

The company also announced that it is splitting its' stock, to further boost the value of the brand. 

The move is backed by South Korea’s government and the Korea Exchange, who are encouraging domestic companies to split shares as a way to boost trading by individual investors and increase stock turnover to raise money and fund expansion.

In separate regulatory filings, the cosmetics player and its holding company, AmorePacific Group stated that each will split their shares 10-for-1.

Tax free shopping incentive

Japanese stores are also offering tourists tax free shopping to tourists to bring in sales, despite the weaker Yen.

As of October 1st, duty-free products in Japan, previously limited to electronics and clothing, included items like food and cosmetics. 

In fact, retailers have already hit their government target five years early, as the number offering the service shot up by 60% in the last six months. 

As retailers scrambled to offer consumption tax free shopping to a record number of 13.41 million tourists in Japan in the last six months, cosmetics sales have seen a significant rise. 

In fact, the government's growth target of 10,000 tax-free shops by 2020, has already been achieved since it was implemented in October.

According to asia.nikkei.com; most of the stores are concentrated in Tokyo and Osaka Prefecture. "Large cities have seen more department stores, electronics retailers and some convenience stores start exempting foreigners from the levy​," it reported.

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