Geopolitics cut into Japanese brands on mainland market

When a dispute over the East China Sea flared up between China and Japan two years ago, graduate student Wei Hanyu ditched her Shiseido Co Ltd beauty products in protest, joining scores of Chinese consumers in a boycott of Japanese brands.

Wei, now 23, said she currently uses a face cream from Aupres, a brand she thought was Chinese or Korean, but which she recently found out is Japanese. Aupres is one of Shiseido's China-specific brands, and the packages carry the parent company's name only in small print.

Customers walk out of a Uniqlo store in Beijing. Japanese company Fast Retailing Co Ltd is expanding its casual clothing Uniqlo brand in China. Reuters

"Its advertisements left the impression that it's a brand designed for young people in cities, similar to some Korean brands," said Wei.

Several executives at Japanese firms operating in China say there is little they can do to counter geopolitical fallout, but companies with products that Chinese consumers don't immediately identify as being Japanese have fared better.

Shiseido says it does not intentionally hide its name, but the discreet branding of its China-only cosmetics appears to be the way to go for Japanese companies seeking to win over consumers in the world's second-largest economy.

Shiseido spokesman Shotaro Nagai said sales of Aupres and its other China-specific brand, Urara, have grown faster than its premium brand. He did not disclose sales figures.

"What's important in the eyes of the consumer is whether the brand image is that of high quality and trust," said Toru Furuya, a Tokyo-based executive strategy director at brand consultancy Interbrand.

Ties between Japan and China have been strained over a territorial row over a group of islands known as the Diaoyu islands in China. Each time tensions flare, Japanese manufacturers of everything from cars to electronics experience slowing sales in China.

Japanese company Fast Retailing Co Ltd is expanding its casual clothing Uniqlo brand in China's vast interior, a region where nationalist sentiments traditionally run high, but where Uniqlo is not immediately identified as being Japanese.