GLOBAL BUSINESS ENVIRONMENT

Business Plan for Establishing Cosmetics

Company in Japan

Submitted to – Submitted by -

Dr. Monika Jain Shivam Goel (22IB475)

1|Page
Acknowledgment

I would like to thank my mentor Dr. Monika Jain, Assistant Professor of

Economics for providing me with the exposure and basket of knowledge
and information to make this report. It would have not been possible
without her constant support and guidance throughout the lectures and
meetings.

I would also like to thanks my classmates and students from various

sections who helped me in doing this report.

2|Page
 Contents

Chapter No. Chapter Names Page No.

Cosmetics market in
1 4
Japan
Some trends in
2 cosmetics industry in 5
Japan
3 Regulations 6
Competitors’ strength
4 and strategy to find 7
market space
Possible threat and
5 9
solution
6 Conclusion 10
7 References 11

3|Page
Cosmetics market in Japan
An ever-evolving market that is affected by both local and international
skincare regimens is supplied by the Japanese cosmetics sector.
Manufacturers of beauty products are entwined with a range of sectors and
international markets and are home to multinational cosmetics businesses
that have grown worldwide. As a result, they profit from research
discoveries and global trends. Numerous cosmetic items, particularly
skincare and makeup, support the Japanese beauty sector. The wellness
sector also supports the market by providing a range of beauty services,
including body care, alternative medicine, and aesthetic salons.

Japan is one of the biggest market sizes in the world in cosmetics and
personal care products. It is only followed by USA and China in terms of
market size. Its market has about 3,000 brands of beauty and skin products.
It is also the third largest importer in the same market after France and
South Korea.

4|Page
Some trends in cosmetics industry in Japan –

- Skincare products – More than 50% of the products of cosmetics

consumed in the country are of skincare. People here are more
concerned about their skin health as well as looks. They prefer high
quality products and do not compromise in the same. They also keep
up with the trends and keep trying new products or types so that
brings to the table the ability of a business to succeed in this market.

- D2C Model – Here, Direct-To-Customer model has been working

effectively because the people are so concerned about their skin that
they are buying personalised products of good quality.

- Technology – Japan has been using technology effectively to boost its

products’ quality.

For example –
o Pola Orabis’ AI for personalised skincare and
development
o Kao’s fibre technology
o Fancl’s AR simulator

5|Page
Regulations related to the skin care-based
products business in Japan
Under the Pharmaceutical and Medical Devices Act (PMD Act), the Ministry
of Health, Labour, and Welfare (MHLW) of Japan regulates cosmetic
products. The MHLW examines and assesses the adverse impact reports
submitted with the Quasi-Drugs Applications and Cosmetics Registration in
Japan (Foreign Manufacturers, Importers).

Japan is one of the wealthiest countries in Asia, and despite economic

fluctuations, its cosmetics sector is expanding. In Japan, cosmetics are
divided into two (02) categories by the MHLW. Depending on the type of
product, the Manufacturers/Importers must complete their Cosmetic
Product Registration in Japan and apply for Marketing Approval.

Generic cosmetics are divided into 5 types –

 Perfume and colognes

 Makeup
 Skincare
 Haircare
 Special purpose cosmetics

Quasi-drugs - This class of goods includes items that reduce nausea, heat
rash, mosquito bites, and hair growth. Some medicated cosmetics, such as
those used to treat oily skin, acne, or wrinkles, are also referred to as quasi-
drugs.
The principal cosmetic package for all domestic and imported products
must include a label in the native tongue, as required by Japanese cosmetic
labelling regulations. Inaccurate labelling translations may need extensive
reworks and incur a considerable financial loss.

6|Page
Competitors' strength
Manufacturers like Kao, Kose, Pola, etc. are enjoying a strong market share in
Japan due to highly innovative products in the market. They are also importing
products from France and USA which are meeting customers’ demand and are
high in quality.

Strategy to find a market space

Japan’s retail market is basically divided into 2 types –

- High end stores – Here the people get a feeling of royalty and they feel
emotionally happy when they buy a luxurious product. The gold-
coloured look and packaging makes the product in this category
absolutely luring for the people.

- Low end stores – Here the customers are of mass numbers. These are
the consumers who use products for daily purpose and do not look for
too much quality. They are satisfied with the mid quality products and
easy availability.

So, for our business to make a market space we can do the following steps-

- The customers have started to develop a shift in their demands. They

are now looking to buy more differentiated products than they use to
buy. So, our business can focus on making differentiated products.

- People in Japan are interested in using personalised products. So, we

can make individualistic products and make a special place in the
industry.

- For the high-end stores, there are always new players who enter the
market with high quality but fail in innovation. We can make

7|Page
 innovated products, bring new trends and make people dependent on
our brand due to the always happening innovations.

- Mass consumers need easily available, good quality and broadly

categorised products. They like to purchase these products as a
necessity. So, for them to make the shopping process easier, we need
to design dedicated marketing and selling strategies.

- Packaging plays a huge role in this country. People really look for good
packaging to get a premium feel and as it adds value to the product.

8|Page
Possible threat situation
If we enter the market with a skincare product for acnes called Kitofem. It is
a mid-priced product with very good quality and packaging. It has captured
a huge market share in the market in this category. However, due to
unavoidable competitors entering the market yearly, Kitofem’s market size
reduced by 50%. What will be the possible solution to get out of this
situation? Let us find out.

Solution to tackle possible future threat

- Find out what are the differences between the Kitofem and the new
product in terms of product, functions, packaging, price, etc.
- Research about why the customers switched from your product to the
competitor’s
- Innovate your product using recent technology and provide some
lucrative side products which can be as useful as them but with a
different function.

9|Page
Conclusion

With the right research about the cosmetics industry in Japan we can
develop a business for there. There needs to be a good business model
through which different aspects like product life cycle, revenue model,
customer base, etc can be understood. As this is a country with huge
demand in cosmetics products as well as equal level of competitors, it
leaves out a whole lot of challenges while entering the market and
sustaining in the same, but once done, it brings lots of opportunities on the
table too.

One needs to take care of the regulations of doing business in this country,
the demands of customers, competitors’ analysis, and market research.
There is always a scope of innovation time after time, so, one needs to keep
up with the trend and make innovative products for the people.

10 | P a g e
References

1. https://www.trade.gov/
2. https://www.statista.com/
3. https://www.freyrsolutions.com/cosmetics-regulatory-services
4. https://www.tknexus.com/

11 | P a g e