Shiseido bet on China's travel retail boom — then watched it collapse

Shiseido, Japan's oldest and largest cosmetics company, had bet heavily on China and travel retail as its growth engine. Before the pandemic, Chinese tourists buying luxury skincare at duty-free shops in Hainan and across Asia were a major revenue driver, and Shiseido's premium brands like Clé de Peau and NARS were among the top sellers.

When China reopened after its zero-COVID policy ended in late 2022, Shiseido and other Japanese beauty companies expected a surge. It did not come. Chinese consumers, facing a slowing economy and rising nationalism, shifted spending toward domestic brands. Travel retail in Hainan, which had boomed during the pandemic when Chinese shoppers could not go abroad, contracted sharply.

Shiseido's stock fell roughly 40% in 2023, and the company issued multiple profit warnings. CEO Masahiko Uotani, who had championed the premium-and-China strategy, was replaced. The case exposed the danger of over-reliance on a single market and a single channel, and it prompted a broader rethink across Japanese beauty companies.