Speaking at the company’s presentation of its 2019 first-half results, president and CEO Masahiko Uotani believes the sports industry is set to grow because of China’s Healthy China 2030 initiative.
Driven by President Xi, the initiative puts health at the centre of the country’s entire policy-making machinery, with health outcomes having to be included in all new programmes.
“China’s age structure is changing and income is increasing. There is a policy launched by the government and I think the medical and sports industries will be enhanced and should grow. It’s said that [Chinese] people [participating] in marathons have increased significantly but it is still considered low. We will see explosive growth going forward so Shiseido and Anessa would like to cooperate," said Uotani.
The Japanese cosmetics company has already begun investing in this strategy with two high-profile title sponsorships: the tennis WTA Finals Shenzhen and the Cup of China ISU Grand Prix of Figure Skating.
Uotani added that Shiseido also planned to sponsor the 2020 Beijing Winter Olympic Games.
Good investments
While this will require significant investments, Uotani believes this will have a positive impact on the company’s performance in China.
Especially, he continued, since the Chinese government announced earlier this year that it would reduce taxes to boost spending amid the US-China trade tensions.
Uotani added that sponsoring these sports events also gave the company a chance to give back to the Chinese society.
For instance, to commemorate the title sponsorship of the Cup of China ISU Grand Prix of Figure Skating, Shiseido established the Shiseido My First Beauty Project to support young Chinese figure skaters.
The company will provide make-up products and classes to children who are new to figure. It will also dispatch make-up artists to help competitors prepare for their competitions.
Additionally, the company plans to provide make-up and other related support to participants of the Chinese Figure Skating Association’s (CFSA) national figure skating qualification test.
This test is held eight-times a year across China and is an important test for aspiring figure skaters in order to realise their aspirations of skating professionally.
China performance so far
Shiseido reported that its performance in China remained strong in the first-half with 20.5% yoy growth in net sales on a local currency basis.
Net sales growth for the second quarter also accelerated by 22.3% yoy while operating profit rose 15.2% yoy due to an increase in gross profit and sales despite increased investments in marketing.
The company attributed the growth to the strong performance of its prestige brands such as Shiseido, Clé de Peau Beauté, IPSA and NARS. In terms of overall sell-out, prestige sales increased by over 40%.
By brand, Shiseido and Clé de Peau Beauté were strong drivers, with 40% and 50% growth respectively. According to the company, this was led by increasing sales per store rather than store expansion. Additionally, NARS saw sales triple.
