“It was based on stable employment and higher income and consumers, especially younger people, gained confidence in China’s future and boosted consumption.”
Against this background, Chinese consumers relied on price to determine the quality of products, fueling a penchant for high-quality cosmetics from foreign brands, he continued.
“Consumers’ preference for imported products drove the rapid expansion of the prestige cosmetic market, and growth was boosted by the emergence of e-commerce focused on Tmall as a new consumption channel.”
However, repeated lockdowns and higher unemployment rates have created a lot of uncertainty for Chinese consumers. This forces them to limit consumption and refocus on saving.
“The changes are so dramatic in China with a resurgence of COVID-19 this time consumer confidence has changed so much,” he said.
Luxury and function
At the same time, he noted that this also pushes Chinese consumers to value long-term effects and well-being.
“As a result, they give more importance to the effects and efficacy of skin care products and start buying local brands if they are worth the price. Younger people are becoming more selective and also focused on low prices.”Fujiwara said.
In this environment, the company expects an emergence of local beauty brands, especially skin care brands backed by scientific research. On the other hand, Fujiwara highlighted opportunities for Shiseido in the luxury beauty segment.
“As far as import brands are concerned, the growth is clearly in high regard. The market will shift to stable growth from past rapid growth. As consumers focus on essentials and real value, I think this presents us with a great growth opportunity.”
In line with this, the company is making plans to stimulate growth “consumer-oriented brand and product communication”,instead of large-scale promotions as in the past, Fujiwara said.
“We will develop communications focused on product effects and efficacy and expand online communication touchpoints. We will also provide consumers with an entirely new experience to deepen their understanding of our products and brands.”
In addition, the company will expand the online touchpoints of its prestigious brands, such as Clé de Peau Beauté recently launched on JD.com.
In the medium to long term, the company will build a strong foundation based on its prestige brand portfolio with a focus on function and effectiveness. “We will shift investments from the second half in view of its development,” Fujiwara said.
Overall, the company’s goal is to position itself as the Asian beauty expert in China.
New growth areas
Fujiwara also stressed the importance of being proactive in creating new growth categories. He highlighted the company’s expansion into categories such as men’s cosmetics and beauty supplements in China.
In July this year, it launched the SIDEKICK in China through e-commerce. The brand targets Gen Z male consumers. Earlier in June, it launched INRYU, a Chinese-developed beauty supplement brand. through cross-border e-commerce channels.
In addition, the company will partner with Trautec Co., a medical aesthetics healthcare company, to co-develop new functional skin care products for the mass market and professional channels.
“As we drive transformation and structural reform to deliver sustainable growth with existing brands, we are proactively working in new growth categories aimed at driving growth in the changing Chinese market,” Fujiwara said.