Spotlight on Japan: premiumisation, exports and changing workforce see success

By Natasha Spencer

- Last updated on GMT

Spotlight on Japan: premiumisation, exports and changing workforce see success

Related tags: Cosmetics

Japan experiences overseas popularity with global beauty buyers through branding, industry and societal changes.

In 2017, premium skin care products and rising exports to Asia have resulted in Japan’s cosmetics shipments totalling approximately 1.43 trillion yen (€11.9 bn) from the period January - November 2017, Nikkei Asian review revealed. 

Ministry of Economy, Trade and Industry data shows that this represents a 6% increase from the same period in 2016.

Luxury overseas appeal

This figure reached ¥294 bn (€2.2 bn) in 2017, excluding perfume and hair care products. Quality-assured Made in Japan-cosmetics, particularly high-end skin care items including lotions have contributed considerably to these exports numbers. Over the last ten years, this number has more than tripled. 

These statistics are also based on strong customer retention and loyalty. Repeat purchases by Japanese visitors returning for new cosmetics buyers via the internet and local stores are high.

Of the total number of cosmetics exports, 90% of these went to Asian countries. The largest purchasing population was Hong Kong at 28%, closely followed by mainland China with 27% and then South Korea at 11%.

Preparing for growth

Several of Japan’s household cosmetics producers have upped their production capacity to reflect the growing demand for beauty items that hail from Japan. This pledged commitment indicates that Japan’s export hike and luxury-led approach is expected to continue to attract Asian buyers.

Leading industry names, such as Shiseido, increased operations at their domestic factories to near full capacity in December 2017, when shipments reached around 140 billion yen (€1 bn).

Pola Orbis Holdings and Shiseido’s new anti-wrinkle lotions and creams, launched to the public in 2017, were a big hit with high-end beauty buyers, for example.

As a result, the cosmetics industry expects high operating profits for Japanese household names, Shiseido, Kose and Pola Orbis Holdings for the 2017 fiscal year.

As Shiseido prepares to develop factories in Otawara and Osaka in early 2019, and with Kose pledging to add capacity at its main production base in Isesaki, these operating profits are expected to be record-breaking numbers.

Strengthening Japan’s workforce

The workforce landscape is still in a state of flux. In recent years, there has been a shift in the cosmetics industry as brands are making contract workers permanent employees in a bid to improve customer services, maintain production levels and bolster sales.

With the number of foreign tourists on the rise in Japan, brands are placing emphasis on building their beauty consultant sector and factory workforce.

From contract to permanent

In the 2016 fiscal year, Shiseido began taking on permanent beauty consultants, marking the first time it has done so in eleven years.  

Kose has also given an estimated 1,200 beauty consultants permanent positions since October 2014, with the ratio of permanent staff rising from approximately 50% to now 90%.

Cosmetics company, Fancl, announced that approximately 1,000 contract employees at its directly managed nationwide stores will be made permanent staff in April 2018.

To maximise the quality of customer service, Fancl will develop a new category called “region-specific permanent employee”​ who, ideally, would not be required to relocate for work, and will result in all contract employees becoming permanent staff.

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