Good foundations, future opportunities
Japan’s cosmetics market is an extremely lucrative place for European brands. In 2008, Japan imported ¥89 billion worth of EU makeup, fragrances, shampoo and other cosmetics products, accounting for more than half of all such imports.
Over the years, the world’s second-biggest market for cosmetics products (¥1.5 trillion in annual sales) has gradually become more accessible to foreign companies as Japanese officials loosen some regulations and streamline others.
Yet, despite the relatively rosy situation, a number of serious barriers remain for European and other foreign manufacturers and marketers. As Bruce J. Ellsworth, chairman of the EBC Cosmetics Committee, puts it: the companies continue to grapple with “insufficient regulatory transparency, a low degree of harmonisation with standards used in other parts of the world, and unnecessarily complex approval and manufacturing requirements.”
One problem area concerns cosmetics such as creams that smooth out the appearance of wrinkles around the eyes. Boasts about their benefits in Japan are limited to a list of 55 “efficacy claims” permitted by Japan’s Ministry of Health, Labour and Welfare (MHLW). But the committee wants the list expanded to reflect claims now commonly accepted in Europe.
Another issue concerns quasi-drugs. These drugs have only mild effects on the body and, as such, can be sold over the counter without a prescription.
But it has been difficult to find out exactly which ingredients are approved for use in quasi-drugs and which aren’t. In the past, this posed a dilemma for the industry, since the MHLW had agreed not to disclose data that could potentially lead to the leakage of corporate secrets.
Now, however, “companies want more transparency,” says Ellsworth, who is director of government affairs at Johnson & Johnson. “It just got to the point where companies said ‘this is going too far.’ Basically, keeping the information secret became more of a cost than a benefit.”
The ministry responded in December 2008 by working with the industry to publish a list on its website of approved ingredients.
While the committee welcomes the move, it also wants the ministry to lengthen the list to include a broader range of ingredients. The ministry should also give more details on what product types the ingredients have been approved for, says Ellsworth.
Yet, the committee’s agenda isn’t limited to demystifying regulations. In at least one other area, the committee wants the existing regulations implemented more thoroughly.
This issue involves parallel imports. These are products brought into Japan without the knowledge or permission of the manufacturer. If you live in Japan, you’ve probably seen fragrances or other cosmetics products being sold at cut-price rates by discount retailers, sometimes operating from street-side stalls.
It’s not the cheap prices per se that irk the committee, but how these importers are able to make light of Japan’s regulatory process, even though the law requires grey-market operators, like manufacturers and registered importers, to monitor their products for safety and quality.
“If there are problems, say with allergies, then that comes back to us,” explains Serge Grebert, president and representative director of Bluebell Japan, a registered importer of fragrances and cosmetics. “We often end up bearing the cost of it – and the cost in terms of image if something goes wrong.”
The potential for such problems is very real, as the parallel importers usually don’t handle or check their products carefully. “All these products [cosmetics and fragrances] degrade over time if they’re not stored properly,” says Grebert. “That’s how they can sell their products so cheaply – because they don’t have the associated costs. There are costs involved in doing things the right way.”
The committee is calling for all importers to be made subject to the same rules. “We want to make sure that everyone has the same regulations to abide by and the same costs associated,” says Grebert.
Expanding efficacy claims, increasing quasi-drug transparency and clamping down on parallel imports are but three of the advocacy recommendations on the committee’s list. The committee also wants improvements in the approval process, the setting up of standards for non-animal testing, and to avoid misleading numerical carbon-footprint labels on products.
The committee has been gearing up for a busy spring season of advocacy. Meetings with the Ministry of Economy, Trade and Industry, as well as the MHLW, took place in early April. In addition, the committee planned to meet separately with several individual members of the Diet.
The committee also planned to spend much of the spring finding areas for cooperation with the Japan Cosmetic Industry Association and then using what its members learned during the spring to reformulate its strategy by the summer, according to Ellsworth.
“If our recommendations could be implemented, it would help us bring more of our global products to customers in Japan in a cost-effective manner without compromising safety,” says Ellsworth.