On August 24, Japan started the release of treated radioactive water from the Fukushima nuclear power plant's wreckage into the Pacific Ocean.
This polarising move prompted China to immediately ban all Japanese seafood imports. Meanwhile, the release of radioactive wastewater has had repercussions on the Japanese cosmetics sector.
Since June, chatter on social media platforms such as Xiao Hong Shu, or Little Red Book, emerged questioning the safety of Japanese cosmetic products, CosmeticsDesign-Asia reported previously.
“Many consumers have been shunning Japanese cosmetics since late August because of the Fukushima treated wastewater release,” said Shinichi Mochizuki, director and CFO, Kosé.
In the wake of this, Shiseido curbed marketing activities to manage costs over the quarter ending September 30.
The company went so far as to suspend live streaming broadcasts and cancelling promotion of new products in China.
This resulted in an over 20% decline in e-commerce sales while flagship brand Shiseido saw sales tumble by over 20% despite the launch of its Eudermine Activating Essence.
Pola Orbis also faced similar difficulties with sales in China declining approximately 24% year-on-year. Online and offline sales fell sharply by approximately 34% and 18% respectively.
“The China business fell short of expectations due to unexpected changes in consumption trends and the impact of treated water. Consumption trends were weaker than we had expected, and store visit conditions were not improving,” said Pola Orbis Holdings.
“The impact from the treated waster was the KOL distribution was suspended, customer inquiries and aesthetic appointments were cancelled, and there was a period when it was difficult to conduct activities within e-commerce platforms, resulting in a particularly difficult time for new customer acquisition.”
The reluctance to buy Japanese products among Chinese consumers also exacerbated the already tenuous travel retail situation in China and South Korea.
Additionally, Kosé reported that sales in Asia, declined by 23.2%, which it attributed to the decline in the China market, as well as in travel retail.
Firms brace for tough Q4
Pola Orbis expects that sales in China will continue to be affected in the last quarter of this year.
In response, the firm will host an event for its flagship brand POLA. The goal is to “hold a brand experience art event as a new trial to communicate the philosophy of the B.A series, aiming to expand brand awareness and acquire customers.”
Shiseido president and COO, Kentaro Fujiwara said this setback in China was only temporary.
“We assume the reluctance to buy Japanese products after the release of the treated water will normalise by the first quarter of 2024. We will continue to closely monitor changes in the market environment.”
On the other hand, Mochizuki believes this situation will continue to impact Kosé for a longer period.
“We do not expect an overall recovery in sales this year and think that a recovery may not start until about six months later.”
