Shiseido Co., Japan's biggest cosmetics maker, seeks to increase sales in China by 15 percent or more every year as rising incomes in the world's fastest- growing major economy spur demand for consumer products.

"Interest among women in skincare, makeup and haircare is increasing, boosting cosmetics use," incoming President Hisayuki Suekawa, 51, said in an interview in Tokyo yesterday.
He will be the youngest president from outside the Tokyo-based company's founding family when he assumes the post in April.

Shiseido aims to boost overseas sales to 50 percent of its total by 2017 from an expected 42 percent this fiscal year as demand in Japan drops amid sluggish wage growth and an aging population. The 138-year-old cosmetics maker, which competes with L'Oreal SA and Procter & Gamble Co., introduced the DQ skincare brand for drugstores and hair-care products for salons last year in China, whose economy grew 10.3 percent in 2010.

"China's expansion promises growth for Shiseido," said Toshiro Takahashi, an analyst at TIW Inc. in Tokyo, who has a "positive" rating on the stock. "The company's strength is having drugstores as a sales channel, which will allow it to lure customers in inland China."

China accounted for about 10 percent of Shiseido's 644 billion yen ($7.76 billion) revenue in the fiscal year ended in March 2010, spokeswoman Megumi Kinukawa said.

The cosmetics maker acquired San Francisco-based Bare Escentuals Inc. last year for $1.8 billion, according to data compiled by Bloomberg. It entered nine markets including South Africa and Mongolia this fiscal year.

Eoin Treacy's view Cosmetics is one of a number of sectors that benefit from an increase in disposable income associated with a swelling of the middle class. In China this trend is boosted by the absence of a cultural barrier to men using cosmetics. (Also see Comment of the Day on December 20th)


Proctor and Gamble (a dividend aristocrat) broke successfully above $65 last week following more a year consolidating below that level.

L'Oreal found support in the region of the 200-day MA last week and would need to sustain a move below €80 to question medium-term upside potential.

Estee Lauder is becoming increasingly overextended relative to the 200-day MA but a clear downward dynamic would be required to check momentum beyond a brief pause.

Beiersdorf broke downwards from a yearlong range in December and needs to sustain a move above €43 to question scope for some additional downside.

Shiseido remains in a medium-term downtrend, defined by a progression of lower major rally highs. A sustained move above ¥1800 will be required to question potential for continued lower to lateral ranging.