Japan’s Kao is making a renewed marketing push for cosmetics brand Kate across Asia, quintupling promotional expenses there and underlining its Japanese identity on social media to try to fend off rapidly rising Chinese and South Korean competitors.
The health and beauty company announced a new overseas strategy for low-priced brand Kate on June 4 that focuses on becoming a leading Tokyo-based brand in Asia and spreading a worldview that expresses individuality.
Kate specializes in makeup such as lipstick and eye shadow. Rather than relying on face-to-face sales by beauty consultants at department stores, it is sold off the shelf primarily at drugstores and other retail outlets. Prices are around JPY 1,000–2,000 (USD 7–14).
A new sales promotion strategy is intended to spread the brand in Asia and cultivate long-term fans. The first round involves a limited-edition product with packaging featuring a character from “Jujutsu Kaisen,” an anime series popular throughout Asia, which will go on sale June 21.
The company is using around 10 influencers from Japan and elsewhere in Asia to market the project through social media, videos and other online and offline forms. This will mark Kate’s largest social media marketing campaign.
In addition, a limited-time attraction opens at Osaka’s Universal Studios Japan in September where customers can step inside the world of Kate. Taking advantage of the theme park’s popularity with foreign visitors, Kao hopes people will become fans of Kate even after returning home.
Though no specific cost has been disclosed, the company said it is boosting promotional expenses for this effort fivefold.
Kate has expanded into nine Asian markets including Thailand, Taiwan, and Malaysia, but until now the finances involving promotions have been managed separately by location.
Promotions were carried out locally, two to three months later than in Japan, resulting in low brand consistency and synergy.
“We aim to be number one in Asia with a consistent brand message led by Japan,” said Arihiro Iwata, Kate’s brand manager. “We will continuously develop ideas that won’t end as a passing fad.”
The impetus for new promotions in Asia involves the rise of Chinese and South Korea brands. Kate currently ranks second only to France’s L’Oreal in Asia, but its share of low-priced cosmetics in the region has remained mostly flat for the past five years, per UK research company Euromonitor. Newer brands like South Korea’s Clio are on the rise, and they have closed the gap with some top Asian brands to less than one percentage point.
China’s Florasis, known for packaging made to resemble Chinese traditional sculpted art, sells mid- to high-range cosmetics priced JPY 5,000 (USD 35) and up.
Florasis opened its first overseas flagship store in Tokyo in January and is developing Asian markets including Japan using real-world and digital efforts. It has surpassed Kate in overall Asian market share at times in the past five years, according to Euromonitor.
Asia’s market for low-priced cosmetics is expected to expand by about 30% to USD 15.8 billion in 2029 from USD 12.4 billion in 2024.
Kao regards cosmetics as a pillar of its overseas growth and plans to increase foreign sales by 13% from 2024 to over JPY 800 billion (USD 5.6 billion) by 2027.
Oasis Management, a Hong Kong activist investor that holds 5.23% of Kao shares as of December 2024, has criticized Kao for not fully tapping its growth potential overseas.
Kao does not disclose sales by cosmetics brand, but Kate is thought to account for over JPY 30 billion (USD 210 million), or about 10% of the company’s total cosmetics sales. Kao plans to boost that figure to JPY 50 billion (USD 350 million) by fiscal 2030, and double the proportion of overseas sales compared with 2023.
Yet Kao’s cosmetics business posted JPY 3.7 billion (USD 25.9 million) in operating losses for 2024 despite accounting for 15% of total sales. Sluggish consumption in China played a role.
“Makeup is easy to communicate effectiveness and appeals to the digital generation, but that alone does not translate into profits,” said Akiko Kuwahara, a senior analyst at JPMorgan Securities. “After expanding awareness in Asia, the key to growth is whether Kate can differentiate itself by leveraging its functionality and technical capabilities, such as its long-lasting lipstick and three-dimensional eye shadow.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.