Japanese cosmetics company Premier Anti-Aging recently announced the dissolution and liquidation of its wholly-owned subsidiary in Shanghai. The company stated in its announcement that the “deteriorating market environment in China” led to continuous losses at the Shanghai subsidiary, prompting the decision to withdraw its legal entity in Shanghai and focus sales in the Chinese market through cross-border e-commerce.
With the decline in the Chinese economy and ongoing deterioration in the consumer market, more Japanese companies are choosing to exit the Chinese market. Premier Anti-Aging announced on July 14 that the board of directors decided to dissolve its wholly-owned subsidiary, Premier Anti-Aging (Shanghai) Cosmetics Co., Ltd., established in 2021 to sell cosmetics such as DUO in China.
The announcement revealed that despite various measures taken to address the challenging market conditions in China, the Shanghai subsidiary continued to incur operating losses without improvement in its business performance.
Liu Jia, who is involved in cosmetic sales in Shanghai, told a reporter that Chinese consumers have been reducing non-essential spending in recent years, posing a direct challenge for international brands. She mentioned, “Many foreign cosmetics brands exited the Chinese market last year. Japanese brands like Mejina, Sekkisei, and Decorte downsized their counters, and Korean brand Dream Makeup essentially left the mainland market. With reduced income, job uncertainties among young people in China, they opt for cheaper products without much regard for quality.”
Premier Anti-Aging disclosed that the sales revenue of its Shanghai subsidiary in 2025 was 101 million yen, with an operating loss of 50 million yen and negative net assets of 830 million yen. The company had experienced consecutive operating losses from 2023 to 2025, leading to the decision to withdraw the legal entity in Shanghai and concentrate sales in the Chinese market through overseas flagship stores and cross-border e-commerce platforms.
Sales expert Ding Ling in Chengdu noted that many foreign cosmetic companies are closing physical stores and shifting towards online sales, but their sales channels are also diminishing. She explained, “The prices of Japanese and French cosmetics haven’t increased significantly, but with young Chinese having less money in their pockets, they are giving up medium to high-end cosmetics purchases. Foreign companies can’t make money, so they are reluctant to continue investing or expanding in China. Shiseido’s business in Chengdu has declined notably, with foreign cosmetic companies pulling out their offices and having local employees work from home, reporting sales to Japan headquarters daily.”
The continued downturn in the Chinese real estate market has impacted household assets and income expectations. Non-essential consumer sectors like cosmetics, clothing, and dining are facing the effects of declining purchasing power. Ding Ling remarked, “While the Chinese Communist Party encourages residents to increase consumption, issues such as unemployment, income reduction, housing, medical, and education expenses remain unresolved. Many mothers around me are now opting for cheaper goods, adapting to this environment.”
A survey by the Japan External Trade Organization in January showed that among the 784 surveyed Japanese companies in China, only 21.3% planned to expand their Chinese business in the next one to two years, the lowest percentage since the organization began conducting such surveys in the 2007 fiscal year. 64.3% aimed to maintain the status quo, 12.6% planned to downsize operations, and 1.8% planned to relocate to a third country or exit the Chinese market, totaling 14.4%, the highest recorded since the surveys began.
The survey indicated that Japanese companies in China identified wage increases, intensified market competition, and difficulty in acquiring new customers as primary operational challenges. Domestic Chinese companies compete with market strategies based on low prices, supply chains, and online sales platforms. While some Japanese companies are still profitable, they are hesitant to continue investing, hiring more staff, or expanding production.
Mr. Huang, a scholar residing in Japan, highlighted that Japanese companies in China face not only market challenges but also concerns about their employees’ safety amidst prolonged anti-Japanese sentiments promoted by the Chinese government in the name of national security. He expressed, “Prior incidents of attacks on Japanese and American individuals in Suzhou, Shenzhen, and northeastern regions, as well as the killings of Japanese children, have raised fears among Japanese businesses conducting commercial investigations and interactions within China, which could be labeled as espionage. Japanese companies also worry about potential attacks or detentions of their employees.”
Drawing from his experience working at a Japanese company in China, Mr. Huang emphasized, “The Communist Party prioritizes political security over commercial rules, making it difficult for businesses to anticipate what actions might be deemed illegal, or when employees might become targets of political retaliation by the CCP.”
Mr. Huang believed that the Chinese government’s conflicting practices of advocating for stable foreign investments while expanding the scope of the Anti-espionage Law and increasing surveillance on foreign corporate personnel were eroding trust in the Chinese market among foreign enterprises. The growing number of Japanese companies’ withdrawals from China is not merely coincidental but a vote of non-confidence cast against the political environment under the CCP.