The encyclopedia · Strategy & Leadership · Strategic decision · 1975–2025
Watanabe's ¥250M cosmetics wholesale collapse — a 50-year business undone by Korean beauty
A Tokyo cosmetics wholesaler that survived 50 years was crushed by Korean cheap cosmetics, COVID, and the weak yen, falling from ¥1.4B to ¥600M.
Watanabe Co., Ltd. · 2025-10-15
What happened
Watanabe Co., Ltd. was a Tokyo-based cosmetics wholesaler founded in 1975 and incorporated in March 1980 with ¥30 million in capital. The company handled domestic and foreign brand cosmetics, hair care products, and original development cosmetics, selling to specialized wholesalers, cosmetic stores, and directly to individual consumers online.
The company reached peak revenue of approximately ¥1.4 billion, but the Japanese cosmetics wholesale market was under relentless pressure. Deflation and consumption recession since the early 2000s caused prolonged sales decline. The COVID-19 pandemic further reduced sales as cosmetic stores closed and consumers cut discretionary spending.
The most disruptive factor was the influx of cheap Korean cosmetics that captured the young female demographic — a customer segment that had been Watanabe's core market. Combined with the ultra-weak yen policy and high domestic prices, the consumption recession deepened. Revenue fell to approximately ¥600 million by the fiscal year ending February 2025, less than half its peak. The company ceased business on October 15, 2025 and prepared for self-bankruptcy with approximately ¥250 million in liabilities.
Why it happened
- The influx of cheap Korean cosmetics captured young female consumers who had been Watanabe's core market, replacing Japanese and Western brands at lower price points.
- Deflation and consumption recession since the early 2000s caused a prolonged, multi-decade sales decline that the company could never reverse.
- COVID-19 further reduced sales as cosmetic stores closed and consumers cut discretionary beauty spending.
- The ultra-weak yen and high domestic prices continued the consumption recession, making imported cosmetics more expensive for end consumers.
- Peak revenue of ¥1.4B fell to ¥600M, a 57% decline over the company's operating history.
The lesson
A wholesaler that survives 30 years of deflation can still be killed in 5 years by a structural shift in consumer preference — Korean beauty wasn't a competitor, it was a category replacement.
Aftermath
Watanabe Co., Ltd. ceased business on October 15, 2025 and prepared for self-bankruptcy with approximately ¥250 million in liabilities. Founded 1975 (incorporated March 1980) with ¥30M capital in Taito-ku, Tokyo, the company wholesaled domestic and foreign cosmetics, hair care products, and original development cosmetics to specialized wholesalers, cosmetic stores, and individual consumers online. Peak revenue of ¥1.4 billion fell to ¥600 million by the fiscal year ending February 2025.
Sources
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