ANNUAL REPORT 2018

China Business

Continuing Dramatic Growth through Aggressive Investment

FY2018 Results

Net Sales
Operating Profit
Operating Margin
Net Sales Operating Profit Operating Margin

Review of 2018

Through aggressive marketing investment, our cosmetic brands in the China Business, including prestige brands such as SHISEIDO, Clé de Peau Beauté, IPSA, and NARS, and Made in Japan brands such as ELIXIR and ANESSA, achieved significant growth. In addition, we delivered substantial growth for our e-commerce through strengthening our digital marketing and collaboration with key digital players. For local Chinese brands, AUPRES continued to see growth while profitability of Za improved, thanks to our business structural reforms.

SHISEIDO VITAL-PERFECTION
SHISEIDO VITAL-PERFECTION
NARS (Directly managed store)
NARS (Directly managed store)
ELIXIR (Event)
ELIXIR (Event)

Future Market Landscape

The Chinese market is expected to see higher spending by younger consumers born after 1990, as well as market growth led by expansion in tier 3 and tier 4 cities. In addition, we forecast further growth in what is already one of the world’s largest e-commerce markets.

Key Strategies

We will continue to reinforce marketing investment with a view to maintain and accelerate our growth in China. In particular, we will bolster our brand equity focused on SHISEIDO, Clé de Peau Beauté, IPSA, and others with the aim of speeding up growth in the prestige business. Furthermore, we will ramp up investment in digital marketing and e-commerce.

Going forward, we will continue to realize growth in China through such means as establishing a strategic team in Hangzhou together with a major e-commerce platformer with which we currently collaborate.

Clé de Peau Beauté
Clé de Peau Beauté
SHISEIDO モバイル
Strengthening SHISEIDO from a digital perspective
Net Sales Target for 2019 Net Sales Target for 2019

VISION 2020 Strategies and Targets

Accelerate growth of the prestige business
  • Strengthen brand equity for Chinese consumers
  • Enrich brand platformers
Build winning business model for cosmetics and personal care business
  • Establish model for a winning category
Digital smart connection / D2C (direct to customer) and strategic partnerships
  • Strategically manage the Chinese consumer experience using data analytics
  • Develop O2O (online to offline) business model with key digital platformers
Tier and city strategy
  • Establish strong footprint in potential market by leveraging O2O marketing