21 Conversations | Shiseido China’s Toshinobu Umezawa: Chinese E-commerce and AI Experience Have Already Influenced the World

Ask AI · How China’s E-commerce and AI Experience Are Reshaping Shiseido’s Global Innovation Strategy?

21st Century Business Herald Reporter Tao Li Intern Zhang Jiawen Shanghai Report

Toshinobu Umetsu, CEO of Shiseido China and Travel Retail

Under the trend of beauty economy and self-indulgence consumption, the beauty industry is undergoing a structural transformation, with the high-end market rebounding, while mid-to-low-end brands continue to be divested by giants, accelerating the淘汰赛.

“Behind the market recovery in China, the driving forces are very clear. Mainly the improved performance of core high-end brands and the effectiveness of strategic focus. Over the past two years, we have shifted from solely focusing on scale growth to paying more attention to business quality. To do this, we have divested some brands and concentrated our advantageous resources on healthier business areas,” Toshinobu Umetsu, CEO of Shiseido China and Travel Retail, responded in an interview with 21st Century Business Herald regarding a series of recent changes.

By 2025, Shiseido’s net sales are projected to reach 970 billion yen (about 42.8 billion RMB), a slight decrease of 2% compared to 2024, roughly in line with the group’s previous expectations. However, thanks to structural reform dividends and strict cost control, operating profit increased by 22% year-on-year to 44.5 billion yen (about 1.96 billion RMB).

Has Shiseido emerged from the trough? The Chinese market remains a key variable in determining its recovery pace. In 2025, Shiseido will merge its China business with travel retail, achieving annual sales of 342.2 billion yen (about 15.1 billion RMB). Although the full-year sales declined year-on-year, the mainland market experienced growth in the fourth quarter and throughout the year.

The market has changed; China has become Shiseido Group’s second-largest market globally, but in the high-end segment, it still faces competition from giants like L’Oréal and Estée Lauder.

Below is the transcript of the interview:

“21st Century”: This year marks 45 years since Shiseido entered China. If you had to describe the current Chinese market in a few words, what would they be? What growth opportunities do you see?

Umetsu: First, we have a clear definition of the Chinese market: today’s China is no longer a follower of trends but a trendsetter. Additionally, I’ve noticed three very obvious trends in the market:

First, consumer groups are becoming more diverse, with values and preferences increasingly varied;

Second, the rise of the “efficacy verification” camp, where consumers progress from basic skincare to efficacy-driven products. Sometimes they are like university professors, skilled in analyzing skincare knowledge and makeup techniques, sharing professional insights, playing an increasingly important role;

Third, there is a strong desire for diverse lifestyles, with the same group pursuing “a thousand faces” lifestyles.

Against this backdrop, we have identified new opportunities: first, further enhancing high-functionality, high-performance skincare lines; second, providing high-quality makeup and fragrance categories; third, cross-category high-end products, including skin care services, home fragrances, and body care.

“21st Century”: What new strategies does Shiseido have for investment in the Chinese market?

Umetsu: Over the past three years, we have achieved continuous growth in market share for two of those years. Brand growth empowerment, new category expansion, and excellent R&D are our three core strategies. SHISEIDO, Clé de Peau Beauté (CPB), and NARS have established leading positions in makeup, luxury skincare, and high-performance skincare respectively. Additionally, I am expanding into new categories, building a diverse brand and product matrix including skincare, makeup, sun protection, fragrances, and medical aesthetics.

This includes our China team’s independently developed brand, RYLO, which not only serves the Chinese market but also provides important feedback to the group. Whether in innovation inspiration, capability accumulation, or exploring business models, it has given us valuable practical experience. Especially in frontier fields like e-commerce and artificial intelligence applications in China, which have provided deep insights for our participation in China’s market competition and even global R&D.

It can be said that we have absorbed strong innovative capabilities from the Chinese market, and this trend will continue to deepen. Today, China is no longer just an important sales target for us but has become a source of global innovation for the group.

“21st Century”: With the rapid rise of domestic beauty brands, how do you respond to this challenge?

Umetsu: If we talk about differences with Chinese local brands, our advantages lie in strong R&D capabilities and extensive scientific research, along with the synergistic effects of a diversified brand matrix. Our research on Asian skin has been over a century—this is not just marketing talk.

Currently, China has become the second-largest market for Shiseido Group worldwide. We have a highly localized team that demonstrates significant differences from Japan and other markets in R&D speed, response mechanisms, and business models.

I highly recognize the advantages of Chinese local brands in rapid response, flexibility, and close-to-consumer approaches. We are also learning from local companies and brands. But I believe that speed cannot replace depth; profound scientific research has no shortcuts.

“21st Century”: You are currently responsible for both China and travel retail businesses. How do these two markets coordinate? With the recovery of outbound tourism, what role does travel retail channel play in China’s strategy?

Umetsu: Chinese tourists are the most important and active group in global outbound travel, and Chinese consumers are also Chinese tourists. We hope to create a synergistic effect. The brand assets, consumer insights, and innovative achievements established in China will accompany Chinese consumers as they go global. Meanwhile, their brand experiences at airports and duty-free channels worldwide will deepen emotional connections with our brands.

As outbound travel further recovers, travel retail has become another very important part of our China strategy. The key insights we’ve gained in the Chinese market are being brought to Europe, the Middle East, and other global consumer markets through the travel retail channel.