A Japanese cosmetics company has decided to close its wholly-owned Shanghai subsidiary, citing a deteriorating market environment in China. This is the latest sign of the challenges facing some foreign consumer brands, as weak domestic demand and rising competition continue to weigh on the world’s second-largest economy.
Premier Anti-Aging Co., Ltd. announced on July 14 that it will dissolve and liquidate its Shanghai subsidiary after years of operating losses. The company said it plans to withdraw its local corporate presence and instead serve Chinese customers primarily through cross-border e-commerce.
The Shanghai subsidiary, established in 2021, was responsible for marketing and selling the company’s skincare products, including its flagship DUO brand, in China.
In its announcement, Premier Anti-Aging said the subsidiary had continued to post operating losses because of a “deteriorating market environment” in China. It said multiple measures had failed to improve the business.
Company filings showed the Shanghai unit recorded sales of 101 million yen (about $620,000) in 2025 and an operating loss of 50 million yen (about $308,000). Its net assets stood at negative 830 million yen (about $5.1 million) last year. The subsidiary reported operating losses for three consecutive years from 2023 through 2025.
Liu Jia, a Chinese woman who works in cosmetics sales in Shanghai, said Chinese consumers have increasingly cut back on discretionary spending in recent years, with overseas brands among the first to feel the impact.
“Many foreign cosmetics brands have already scaled back or left the China market,” Liu told the Chinese-language edition of The Epoch Times. “Japanese brands such as Menard, Sekkisei and Decorté have reduced their department store counters, while South Korea’s Mamonde has largely exited mainland China. Young people have lower incomes and many cannot find jobs, so they are trading down to cheaper products instead of paying for premium brands.”
China’s prolonged property downturn has weakened household wealth and consumer confidence, affecting demand for non-essential goods such as cosmetics, apparel, and dining.
Ding Ling, a sales consultant in Chengdu in southwest China, said many foreign cosmetics companies have closed brick-and-mortar stores and shifted to online sales, but even those channels have become increasingly challenging.
“The reason is simple,” Ding told the Chinese-language edition of The Epoch Times. “Prices for Japanese and French cosmetics have not increased much, but many young consumers simply have less money. They have given up buying mid-range and premium products. Foreign companies are no longer making enough profit to justify keeping offices and capital in China.”
She added that even long-established international brands have seen business decline, with some companies reducing office space and allowing local employees to work from home while reporting directly to headquarters in Japan.
“The authorities keep calling on consumers to spend more, but they have not addressed unemployment, falling incomes or the financial pressure from housing, healthcare and education,” Ding said. “Many women I know personally have started buying lower-priced products as a way of adapting to the current economic environment.”
In January, the Japan External Trade Organization (JETRO) released a survey that found only 21.3 percent of the 784 Japanese companies operating in China planned to expand their businesses there within the next one to two years. This was the lowest percentage since JETRO began conducting the survey in fiscal 2007.
The survey also found that 64.3 percent of companies planned to maintain current operations and 12.6 percent planned to reduce their business. Another 1.8 percent planned to relocate to a third country or withdraw from China altogether. Combined, these figures represent 14.4 percent, the highest on record, who plan to downsize or exit.
Respondents cited rising labor costs, intensifying market competition, and difficulties acquiring new customers as their main business challenges. Many also said that Chinese competitors have gained market share through lower prices, stronger supply chains, and online sales platforms.
Economic challenges are not the only concern for Japanese businesses in China. According to Huang, a Japan-based scholar, companies are also considering political and regulatory risks when making investment and operational decisions. Additionally, Japanese companies are considering employee safety issues given the stabbing incidents targeting Japanese citizens that have occurred multiple times in recent years, he said.
Huang spoke to the Chinese-language edition of The Epoch Times on the condition that only his surname be used due to concerns about possible political repercussions.
“Japanese companies are dealing with more than just market conditions,” Huang said. “Anti-Japanese sentiment has persisted for years, while the authorities have expanded surveillance and law enforcement under the banner of national security. Companies worry about whether their employees could face attacks or detention.”
He said previous attacks on Japanese and American nationals in China, along with the broadening application of China’s anti-espionage law, have heightened concerns among foreign businesses conducting market research or meeting industry contacts.
“Political security has increasingly taken precedence over commercial rules,” Huang said. “Companies cannot predict what activities might later be deemed illegal or whether employees could become targets of political retaliation.”
He said that while Chinese authorities continue to emphasize efforts to stabilize foreign investment, expanded national security enforcement has undermined confidence among many overseas businesses.
According to Huang, the growing number of Japanese companies scaling back or leaving China reflects broader concerns about the country’s business environment.
