Shiseido Co. aims to maintain annual sales growth of more than 20 percent in China by expanding distribution into inland provinces, the company said Tuesday.
Japan's biggest cosmetics maker plans to sell lipstick, skin cream and other products through another 1,700 stores, mainly in inland regions, during the next two years, up from 3,300 now, said Tatsuomi Takamori, head of Shiseido's Chinese business.
Shiseido is betting that expanding into new regions in China will help it maintain growth in the face of any slowdown in consumption. China retail sales grew 15.2 percent in the first two months of this year, the slowest pace in two years, but Shiseido is predicting the $15 billion cosmetic market will overtake that of Japan's in 2009.
"Consumption in China's inland areas won't likely be significantly hurt by the global recession because the government is ready to take all necessary measures," Takamori said.
Beijing last year announced a 4 trillion yuan ($585 billion) stimulus package to sustain economic growth.
Shiseido's China sales gained about 30 percent in 2007 to ¥60.6 billion. The company had "mid-20s" percentage growth last year and aims to maintain that this year, Takamori said, declining to provide yen figures.
The cosmetics maker, which until now has focused on selling luxury products through department stores in Beijing, Shanghai and other coastal cities, aims to broaden its lineup of locally made products as it expands into regional areas, Takamori said.
The expansion there may help offset falling sales at home, which have fallen for the four months through January.
On Jan. 29, Shiseido cut its net income forecast 17 percent to ¥30 billion for the year through March on weaker domestic sales and a stronger yen.