Shiseido's Travel Retail Sales Hit by China-Japan Tensions
An ongoing diplomatic dispute between China and Japan is negatively impacting travel retail sales for brands like Shiseido, which saw a 3.5% year-over-year decline in its China & Travel Retail business. While some duty-free markets are rebounding, persistent tensions could affect supply chain stability and create inventory surpluses for Japanese brands in the region.
- The current tensions follow an earlier consumer-led boycott of Japanese cosmetics that began in the summer of 2023. This was in response to Japan's decision to release treated wastewater from the Fukushima nuclear power plant, which led to safety concerns among Chinese shoppers and a 30% drop in Japanese cosmetic imports to China in July 2023. - The dispute escalated significantly in late 2025 when comments by Japanese Prime Minister Sanae Takaichi regarding Taiwan prompted Beijing to issue a travel advisory for its citizens against visiting Japan. This action directly impacted "inbound tourists" whose spending is critical for Japan's domestic travel retail market. - In response to the travel advisory, Shiseido's stock experienced its largest intraday decline since April, tumbling as much as 11% in a single day of trading. - The sales impact extends beyond Shiseido to other major Japanese beauty companies; Kosé reported an over 20% decline in e-commerce sales in China, while Pola Orbis saw its sales in the country fall by approximately 24% year-over-year. - Shiseido President and CEO Kentaro Fujiwara stated that the company's "excessive reliance on the Chinese market has been steadily and irreversibly corrected, as intended," signaling a strategic shift. The company is focusing on cost structure reforms to maintain high margins despite the challenging sales environment. - To create a more integrated approach for Chinese consumers, Shiseido merged its China and Travel Retail business units into a single division in March 2025. - While the combined China & Travel Retail business saw a full-year decline, Shiseido's sales grew in other regions. The Americas, EMEA (Europe, Middle East, and Africa), and Asia Pacific regions all posted sales growth, driven by brands like Drunk Elephant and Nars, as well as strong fragrance performance.
