Core Insights - Kose Group is transitioning from a defensive strategy to a strategic offensive approach in the Chinese market, emphasizing localization and technological differentiation in response to the evolving beauty market dynamics [3][31]. Group 1: Kose's Market Strategy - Kose has participated in the China International Import Expo for five consecutive years, showcasing its commitment to the Chinese market [3]. - The company aims to transform China from an "important market" to an "innovation engine" through its unique "smart beauty" logic [3][4]. - Kose's recent strategic shift includes a focus on local innovation and technology, moving away from mere scale expansion [3][31]. Group 2: Product Innovation - The launch of "Decorte AQ Active Pore Cleansing Oil," a product developed using quantum computing technology, marks a significant innovation in the cosmetics industry [5][7]. - This product is the first of its kind to apply quantum computing in cosmetics formulation, significantly reducing the time required for product development [7][10]. - Kose's research team has created a universal artificial pore model to address the complex issue of pore blockage, leading to the development of a scientifically-backed product [11][15]. Group 3: Market Performance - Kose's recent financial report indicates a remarkable 20.9% growth in the Chinese market, signaling a recovery after six consecutive quarters of decline [34]. - The company is expected to achieve profitability for the year, reflecting a successful turnaround strategy [34]. Group 4: Corporate Governance - Kose Group is transitioning to a holding company structure, marking a significant shift in its governance model, which is expected to enhance its adaptability to market changes [34][37]. - The appointment of a new CEO from within the company signifies a move towards modern corporate management practices [35][37]. Group 5: Future Outlook - Kose plans to leverage advanced technologies like quantum computing and iPS cell research to develop products tailored to Chinese consumer needs [42]. - The company is committed to expanding its brand presence and product offerings in China, aiming for a more localized approach to meet diverse consumer demands [40][41].

Core Viewpoint - The article highlights the significant shift in international beauty companies' strategies from "deepening local presence" to "empowering global results," driven by China's innovation ecosystem and supply chain capabilities [3][6][32]. Group 1: L'Oréal - L'Oréal views China as a crucial market and innovation hub, celebrating the 20th anniversary of its R&D center in China, emphasizing that investing in China is investing in the future [5][6]. - The company announced three major achievements at the expo, including the release of a sociology book on beauty, a partnership for consumer rights protection, and a strategic collaboration with Alibaba Cloud [7]. Group 2: Procter & Gamble - Procter & Gamble emphasizes innovation as a means to enhance consumer lives, focusing on consumer-centered strategies to drive category growth and value creation [9][10]. - The company has seen positive market responses to its commitment to innovation and consumer needs, leading to a more sustainable growth path [9][11]. Group 3: Estée Lauder - Estée Lauder's participation in the expo marks a significant moment as it showcases all its brands in China, reflecting its commitment to deepening interactions with Chinese consumers [14]. - The company reported a 9% organic sales growth in mainland China, highlighting its strong performance in the high-end beauty market [14]. Group 4: Shiseido - Shiseido positions itself as an industry innovator, focusing on addressing core challenges in the beauty sector while expanding its scientific and sustainable practices [17][18]. - The launch of the RQ PYOLOGY brand at the expo signifies Shiseido's commitment to the future of the beauty industry in China [19]. Group 5: Amorepacific - Amorepacific views the expo as a strategic platform for deep dialogue with the Chinese market, focusing on local innovation and sustainable development [21][22]. - The company aims to enhance its local R&D capabilities and consumer engagement through various initiatives [25][24]. Group 6: Kao - Kao emphasizes its commitment to the Chinese market, showcasing a diverse range of products and innovations at the expo [28][29]. - The company highlights its collaborative approach between its Japanese headquarters and local R&D teams to meet Chinese consumer needs [30]. Group 7: Henkel - Henkel's participation in the expo reflects its long-term strategic planning and commitment to the Chinese market, showcasing new products and innovations [37][39]. - The company aims to transition from a multi-brand operator to a value chain leader, enhancing its local manufacturing capabilities [39].

Core Viewpoint - The 2025 China International Import Expo (CIIE) saw a lower participation rate from leading beauty companies, reflecting a trend of market growth slowing down and companies opting for cost-saving measures while still seeking innovative product development and localized strategies [1][2]. Group 1: Product Innovation and Localization - New products are taking center stage, with a focus on localized customization being a key theme among multinational companies [2][4]. - Shiseido's medical beauty brand RQ PYOLOGY showcased a new project developed in collaboration with local institutions, emphasizing the importance of local partnerships in innovation [2][4]. - The introduction of a unique "skin rhythm" evaluation system by RQ PYOLOGY aims to provide precise skin condition analysis, highlighting a shift towards research-driven, localized product strategies [4][20]. Group 2: Mature Brand Strategy - Multinational companies are increasingly favoring the introduction of mature brands into the Chinese market as a pragmatic response to slowing growth, leveraging established supply chains and faster market entry [9][11]. - Shiseido's fragrance and beauty brand Serge Lutens made its debut at the expo, with plans for formal entry into the Chinese market next year [11][13]. - The professional skincare sector is also witnessing a wave of established brands entering the market, such as Amorepacific's Aestheline and L'Oréal's Dr.G, indicating a trend towards stability and reliability in brand offerings [11][13]. Group 3: Technological Innovation - Technology is redefining competitive boundaries, with brands like Kosé utilizing quantum computing to enhance product formulation efficiency [17][20]. - L'Oréal released a white paper on PDRN (Polydeoxyribonucleotide) applications in skincare, showcasing its potential in anti-aging and skin longevity [20][22]. - Chinese companies like Huaxi Bio are also responding to global anti-aging trends with systematic research on ECM (extracellular matrix) solutions, indicating a robust focus on scientific innovation [22][24]. Group 4: Market Trends and Consumer Focus - Beauty brands are shifting from aggressive marketing tactics to enhancing user experience, focusing on product efficacy and consumer needs [9][20]. - The emphasis on practical innovation reflects a broader industry consensus that growth is returning to a more rational and realistic trajectory, prioritizing verifiable product effectiveness over mere concepts [24].

Core Viewpoint - Kose Group is committed to the Chinese market, viewing it as a core part of its global strategy and a key driver for innovation and sustainable growth. The company has transitioned from a defensive to an offensive strategy in China, emphasizing its long-term development plans [2][5][17]. Group 1: Strategic Positioning - Kose Group's chairman, Shinohara Kazuhiko, emphasized that the channel optimization and brand restructuring starting in the second half of 2024 is not a retreat but a necessary evolution for long-term growth [5][17]. - The company aims to redefine high-end value and strengthen brand presence in the competitive Chinese market, particularly through its premium brands Decorte and Sekkisei [7][12]. Group 2: Market Performance and Challenges - The high-end cosmetics market in China is experiencing a compound annual growth rate decline of 3% from 2021 to 2024, with market size shrinking from 257.8 billion yuan to 236.4 billion yuan, indicating a loss of 21.4 billion yuan [10]. - Kose recognizes the need to adapt to changing consumer demands and has initiated a structural reform to enhance its competitive edge in the high-end segment [12][32]. Group 3: Product Strategy and Innovation - Kose is focusing on three high-end product lines to enhance brand loyalty and consumer desire, including the Decorte AQ series, which has seen significant online engagement and sales growth [15][21]. - The company plans to introduce new products targeting high-end segments, such as the LIPOSOME lip essence and a quantum-computed formula for a new skincare product, aiming to capture market attention [17][18]. Group 4: Marketing and Consumer Engagement - Kose is enhancing its marketing strategies by leveraging social media and e-commerce platforms to reach a broader audience, including younger consumers and male demographics [22][23]. - The company is also simplifying its product lines to better align with market demands while maintaining its classic offerings [24][32]. Group 5: Localization and Talent Development - Kose is committed to localizing its research and development efforts, having stationed researchers in China since 2004 to better understand consumer needs [38][40]. - The company emphasizes the importance of cultivating local talent to drive innovation and responsiveness in its operations, with plans for ongoing training and leadership development [44]. Group 6: Future Outlook - Kose is optimistic about the long-term growth potential of the Chinese beauty market, focusing on personalized and effective product offerings to meet evolving consumer expectations [48]. - The company's strategic transformation is seen as a comprehensive restructuring that integrates R&D, marketing, and organizational frameworks to foster sustainable innovation capabilities [48].