Restructuring China: inventory, stores and the local plant (2024)

Sound reasoning at entry, and where the miscalculation lay

From a market where it led all Japanese makers with ¥3.6 billion of sales in 1999, KOSÉ cut its scale back in 2024 while booking a ¥4.4 billion loss. What it withdrew from was not China but the exchange of discounts. The 1988 design — make locally, sell locally — was reasonable measured against the price expectations of a time before Japanese-made cosmetics were prized in China, and the miscalculation lies in the point where the reversal in quality perception emptied a local plant of its meaning. Letting go of manufacturing alone in 2017 appears to have been the response to that single point.

The profit, however, was made by cutting marketing and administrative expenses, and sales have not yet returned. Even into 2026 the mainland is still midway through withdrawing from directly operated stores and shifting to agency distribution, and has not reached the stage of contributing substantial profit. In the same market, while the prestige tier stepped out of the fight, KOSÉ Cosmeport’s lower-priced tier has recovered to nearly 80% of its 2018 overseas sales. This was a decision to re-choose the price tier in which to compete, not a decision to leave the market.