Japanese cosmetics giant Kosé has outlined its approach to its growing cosmetics business in China. According to Masanori Kobayashi, the Kosé board member overseeing international operations, the company’s China operations are profitable now that the company has scaled back business at poorly performing department stores while developing business at specialty cosmetics retailers. Surging internet sales and TV-based direct marketing are also helping the profitable growth of business. According to Kobayashi, Kosé’s sales in China increased 50% in 2013. Low-priced skin care products that retail for the equivalent of less than ¥2,000, such as Nature & Co, Recipeo and Junkisei, are proving popular with Chinese women in their 20s and 30s across the mainland.
To deal with intensifying competition, Kosé is considering developing products exclusively for direct sales. Chinese consumers are more receptive to internet marketing than their Japanese counterparts, according to Kobayashi. Accordingly, the company wants to develop a business model for China in which online marketing coexists with store based retailing, possibly selling flagship brands at stores and less expensive products online. The company plans to increase sales per store and expects significant growth in sales through direct channels.