How Fukushima waste water release is hurting Japanese beauty brands

It’s not a good time to be in the cosmetics and skin care industry. Especially if you are a Japanese brand. Think Shiseido, or even Procter and Gamble’s SK-II skincare. Japanese-based cosmetics and skin care brands have reported a dip in their sales in its latest quarter, and according to them, the reason is anti-Japanese sentiment. What’s going on? Why are Japanese beauty sales seeing a dip? And why are companies blaming the anti-Japanese sentiment for it? We break it down for you. Which Japanese beauty brands have seen a tumble? On Tuesday (23 January), P&G announced that sales of its high-end SK-II skin-care brand fell 34 per cent in the greater China region between October and December of last year. In its statement, P&G’s CFO Andre Schulten, however, noted that the dip would be temporary. He said that research indicates that SK-II brand sentiment is improving. But it won’t see a sequential improvement until the back half of the year. CEO Jon Moeller also reminded investors that previous tensions between Japan and China have hurt SK-II’s sales, but the brand always bounced back. But it’s not just SK-II. Japan’s Shiseido has also seen a pullback in China. In fact, in November last year, Shiseido stock fell to a 16-year low last year as Chinese steered clear of the brand’s beauty offerings. A Financial Times report citing data from Chinese groups Feigua and Moojing reported that Shiseido saw online sales in China fall 32 per cent in September 2023 month-on-month, compared with a seven per cent decline over the past six months. But why the dip in sales? Japanese cosmetics and skin-care brands have attributed a dip in their sales owing to the current state of China’s economy. But many of them also cite a rising anti-Japanese sentiment as a reason for the tumbling sales. This anti-Japanese sentiment in China stems from the fact that Japan, last year, started releasing treated radioactive water from its Fukushima nuclear power plant which was hit by a huge tsunami in 2011. Beijing opposed the move and Chinese shoppers began to boycott Japanese beauty brands. Many shoppers on social media platforms, including Weibo and Red, started compiling lists of products they believed could be contaminated with radioactive materials. And despite assurances that their products were safe, the shoppers steered clear of these brands. Many social media influencers also carried out campaigns online to ensure a boycott of J-beauty. [caption id=“attachment_13651322” align=“alignnone” width=“640”] People walk past a booth of Japanese cosmetic brand Shiseido, in Haikou, Hainan province, China. Japan’s Shiseido has also seen a pullback in China. In fact, in November last year, Shiseido stock fell to a 16-year low last year. File image/Reuters[/caption] Notably, the boycott wasn’t restricted to just beauty and cosmetics. Chinese customers called for a boycott of Japanese products ranging from seafood to everyday household goods — as retaliation for the release of treated wastewater from the crippled Fukushima nuclear power plant. As the Washington Post reported, the move was in tandem with Beijing’s long-running efforts to mobilise consumers and take advantage of its huge market to punish other countries for actions it dislikes. **Also read: How Japan’s release of nuclear wastewater has led to a flood of misinformation in China** Moreover, several Japanese entities suffered a wave of harassment phone calls originating from China. This also led to Japan’s vice foreign minister Masataka Okano summoning the Chinese ambassador in August last year over what he called an “extremely regrettable and worrisome” situation. In China’s Qingdao, a stone was thrown into the grounds of a Japanese school when the release of water began. The next day, several eggs were thrown at a Japanese school in Suzhou, in China’s Jiangsu province. Fortunately, in both instances, no children were hurt. Why is China so important to J-beauty market? It’s important to note that China serves as a very important cosmetics market. In fact, China is the world’s second-largest cosmetics market after the US in terms of revenue and consumption value, with 300 billion yuan of revenues as of 2019. [caption id=“attachment_13651332” align=“alignnone” width=“640”] China is the world’s second-largest cosmetics market after the US in terms of revenue and consumption value. Image used for representational purposes/Reuters[/caption] Furthermore, a Statista report from 2021 revealed that an increasing number of women in China chose to buy J-beauty products rather than other brands. The 2021 survey revealed that an estimated 48 per cent of Chinese consumers purchased Japanese skincare products, while 44 per cent had Korean products and 32 per cent preferred European products. **Also read: Are big brands Louis Vuitton, Dior picking Japan, South Korea over China?** In August 2023, Shiseido even announced that China was its largest market with 26.4 per cent market share. In 2022, the country contributed a whopping 24.2 per cent to the company’s overall sales. [caption id=“attachment_13651342” align=“alignnone” width=“640”] Sales representatives stand behind counters during a cosmetic exhibition in Hong Kong. J-beauty has a big following in China. File image/Reuters[/caption] But why does J-beauty have such a following in China? There are multiple reasons to why J-beauty has such a big following in China. Firstly, Japanese cosmetics are extremely popular among Chinese consumers thanks to their high-quality ingredients, natural virtues, as well as worldwide renown. Furthermore, with Japan being China’s neighbouring country, Japanese people also share the same perception of beauty and have almost the same kind of skin. Thus, it is easier for Japanese brands to understand and adapt their products to Chinese consumers, compared to western brands. With inputs from agencies