Cosmetics to Japan
(Last updated: 05 Aug 2013)
Trends and opportunities
The market
Japan was the world’s second largest cosmetics market after the United States, valued at JPY1605 billion in the fiscal year ending in March 2011, representing growth 3.9 per cent from the previous year (Source: Japan External Trade Organization (JETRO)). The Japanese cosmetics market places high value on quality and functionality, and sets the trends in cosmetics for the rest of Asia.
Imported cosmetics
The same year, the organic cosmetic market in Japan was estimated at JPY93 billion, a 6.7 per cent growth year-on-year (Source: Yano Keizai). Sales channels have diversified from mainly internet sales and cosmetics specialty stores, to mainstream department stores. Organic certification organisations ECOCERT (France) and BDIH (Germany) have established offices in Tokyo. There are two Japanese organic cosmetics certification bodies: the Japan Organic Cosmetics Organisation and the Japan Organic Cosmetics Association.
Demand for functional products that provide specific benefits has increased in recent years, as Japanese consumers increasingly seek value for money goods. According to the Daily Cosmetic News, the following are emerging trends for organic cosmetics:
- In categories other than skincare (eg. hair care and makeup) are expected to grow
- Consumers are becoming increasingly concerned/interested in ingredients used in organic cosmetics
- Further diversification of sales channels
- Even more new brands introduced to the market
- Product safety and certification becoming even more important
France and the US have traditionally made up almost half of imported cosmetics to Japan and are the first and second largest exporters of cosmetics to Japan respectively. In 2010, Thailand displaced the US, as the impact of economic stagnation in the US prompted major foreign affiliated manufacturers to move their hair care product manufacturing facilities to Thailand, as well as other Asian countries. In 2010, Thailand more than doubled exports of cosmetics to Japan on a volume basis from the previous year. France has continued to maintain its strong position, supported by its positioning in perfume, eau de cologne, makeup cosmetics and skin care cosmetics.
Opportunities
Japanese cosmetics companies are actively sourcing innovative products from overseas. Australian cosmetics and beauty products are gradually establishing a reputation for containing pure essential oils and unique natural materials.
Australian cosmetics are expected to be made in Australia contain natural ingredients. Those that are made of natural ingredients should fit into one of the following groups:
- Organic certified products
- Cosmeceutical products with proven scientific evidence of their effectiveness
A unique value proposition is necessary to attract potential customers. This could be an exclusive ingredient or a story to tell potential partners and consumers – simply being Australian and natural is not enough. Market entry also depends on competitive pricing and excellent packaging.
Competitive environment
The cosmetics market in Japan is known to be one of the most sophisticated and competitive markets worldwide. Over 1,000 cosmetic manufacturers operate in Japan, including foreign companies. However, there is an overwhelming presence of domestic manufacturers that command a good share of the market. Domestic competitors such as Kanebo, Shiseido and Kao each occupy 10-15 per cent of the Japanese cosmetics market.
Although Japan’s strong domestic brands have a big presence, imported brands, mainly from France, also have a place. Australia is yet to be seen as a major supplier of cosmetics or beauty products in Japan, and there is a relatively small number of Australian brands in the Japanese market.
Tariffs, regulations and customs
Under the Pharmaceutical Affairs Law, companies that import, wholesale, retail and market cosmetics for business purposes require a manufacture/import and distribution of cosmetics license from the Ministry of Health, Labour and Welfare.
In addition, the information required must be printed directly on both containers/vessel or external packaging. All information must be written in Japanese.
A list of ingredients, together with details of the manufacturing process must be provided to comply with importing procedures.
Marketing your products and services
Market entry
Japanese consumers are discerning about their selection of cosmetics. There are two main groups of consumers:
- low-price-oriented young women
- middle-aged/older women who seek functionality and higher-value-add items
To enter the Japanese market, companies must gain a thorough understanding of issues such as pricing, packaging, and distribution options.
Japan's cosmetic industry is characterised by strong competition between domestic and foreign brands. To be able to compete, a brand and its product must be unique – with clear features that distinguish it from others. These factors could be functional characteristics, such as natural anti-aging or whitening effects, or marketing characteristics, such as packaging design and/or branding.
The use of media and celebrities as spokespeople for a specific brand or product is a major marketing tool for cosmetics companies. Products are better recognised and often develop into a trend from commercials, magazine and poster advertisements.
To market your product effectively, consider:
- Working with, and being guided by your local Austrade representative to ensure a customised market entry strategy is implemented, and that your products meet the specific needs of the Japanese consumer
- Monitoring the Japanese cosmetics industry to identify changes and growing trends that may affect your marketing strategies
- Developing relationships with local partners and/or distributors to facilitate ease of entry into Japan
Distribution channels
The cosmetics market in recent years has divided into two separate markets: a high-end market and a budget market. The higher-end market consists of top domestic and foreign brands that are usually found in department stores and are sold over the counter by personal advisors and make-up artists.
The lower-end budget market, which has expanded in recent years, covers supermarkets, convenience stores, and drugstores. Products for the budget market may also be foreign brands that are in the initial stages of gaining recognition in the market and are sold at largely discounted prices for a limited time. Otherwise, they are domestic products that are second tier brands of top manufacturers.
Channel specialisation is a major characteristic of the Japanese market. Consumers buy mass marketed products inexpensively at supermarkets, discount stores and drug stores. High-end consumers tend to buy higher priced products at department stores and cosmetics specialty stores. Companies that are able to market to both channels tend to be domestic cosmetics companies with a large sales force that can cover both segments. Due to the pricing structure, imported cosmetics usually fall into the category of the high-end market where a strong story, branding and excellent packaging are essential.
(Source: JETRO)
Links and industry contacts
Cosmetics–related resources
Cosmetics Importers’ Association of Japan (in Japanese) – www.ciaj.gr.jp/english
Japan Cosmetics Industry Association (in Japanese) – www.jcia.org/
Japan Cosmetic Suppliers Association – http://jcsa.ne.jp/en/index.html
Government, business and trade resources for Japan
Ministry of Health, Labour and Welfare – www.mhlw.go.jp
Ministry of the Economy, Trade and Industry – www.meti.go.jp/english/aboutmeti/data/a226004e.html
Japan External Trade Organization (JETRO) – www.jetro.go.jp/australia
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.