Photo/Illutration A production line for the flagship Elixir line is unveiled on May 26 at Shiseido Co.’s Fukuoka Kurume Factory in Kurume, Fukuoka Prefecture. It is fitted with the world's first automatic packaging feature for cosmetics. (Takuro Chiba)

Cosmetics giant Shiseido Co. is relocating its production facilities back to Japan in seeking to win customers with a “made-in-Japan” brand.

“What is important for business is brand values,” said Shiseido President Masahiko Uotani. “We are confident we should run our production bases in Japan.”

Three plants were set up over the course of three years, doubling the corporation’s factories in Japan.

Buoyed by the weakening yen, Shiseido is looking to bolster its exports from Japan to various areas around the world as fewer foreign visitors can travel to Japan to buy their products. 

Shiseido unveiled its Fukuoka Kurume Factory to reporters on May 26, which started operations in April in Kurume, Fukuoka Prefecture. The facility can make 140 million units of skincare products from its core Elixir line and other lines annually.

Products manufactured there are sent out not only to Japanese consumers but also to those in China and other Asian nations from nearby Hakata Port. Profits linked to the plant are expected to rise due to the recent drop in the yen.

Shiseido in December 2019 opened its Nasu Factory in Otawara, Tochigi Prefecture--its first new facility in Japan in 36 years. The Osaka Ibaraki Factory was next created in Ibaraki, Osaka Prefecture, in December 2020, before the latest Fukuoka Kurume Factory opened.

There are now six domestic production facilities. Shiseido used to have three. The investments put into the facilities totaled 140 billion yen ($1.1 billion).

Almost all flagship skincare products from the company’s major lines, including Shiseido and Elixir, will be made in Japan from now on. Shiseido's products are available in 120 countries and regions.

Plans to erect new plants were proposed around 2015, when Tokyo saw a massive influx of visitors from overseas who bought Japan-made goods in bulk, according to Uotani.

Shiseido’s sales topped a record 1 trillion yen in 2017, and it failed to keep up with the growing demand. A succession of products went out of stock, placing the enterprise under pressure to boost its manufacturing capabilities.

The novel coronavirus pandemic brought an end to the boom shortly after the Nasu Factory began operating, sending Shiseido into the red as it logged a net loss of 11.6 billion yen for the business year ending in December 2020.

Shiseido, however, decided to continue forging ahead with its factory installation project as initially planned as it believes making products in Japan constitutes its “brand value.”

The company's emphasis on safety and the quality of cosmetics applied directly to the skin is considered as being of particular significance. Products made in Japan are enjoying a far better reputation and popularity all over the globe after many foreign visitors to the country tried them.

The move to domestic production is in marked contrast to Shiseido’s former policy of transferring production abilities abroad.

Domestic plants were halved to three between the 2000s and 2010s. A Vietnamese counterpart was introduced in 2010 to create cheaper products targeting customers in other Asian nations.

Finding that the reform did not work to improve its profitability, however, with a net loss of 14.6 billion yen reported for the then fiscal year ending in March 2013, Shiseido appointed Uotani as president in 2014 to reconstruct the corporation.

Uotani set the goal of making Shiseido a “global brand” and started weeding out low-profitability sections. Daily-use product lines, such as Tsubaki and Uno, were sold off in 2021 along with a U.S. cosmetics business.

That made clear Shiseido’s stance of focusing on mid- to high-priced skin care products, in which the company has specialized expertise.

Although relocating factories to Japan entails a higher currency exchange fluctuation risk and expensive delivery costs, Uotani stressed that he has no intention to hesitate. 

“Despite the fluctuating exchange rate, the basic course of action (of having domestic production) will not change,” he said.

(This article was written by Takuro Chiba and Kanako Tanaka.)

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