Procter & Gamble’s SK-II Sales Drop 34% in China Due to Anti-Japanese Sentiment
In its latest quarter, Procter & Gamble (P&G) reported a 34% decline in sales for its high-end SK-II skin-care brand in the greater China region. The company attributed the drop to a combination of China’s slow economic recovery and anti-Japanese sentiment.
The Impact of Anti-Japanese Sentiment
SK-II, a Japan-based brand known for its high prices and reliance on travel retail, has faced challenges in China due to the country’s economic situation. However, P&G executives also highlighted the impact of anti-Japanese sentiment on the brand’s sales during the fiscal second quarter.
Backlash from Fukushima Water Release
In August, Japan released treated radioactive water from its Fukushima nuclear power plant into the Pacific Ocean. This move sparked strong backlash from neighboring countries, including China. China retaliated by banning all seafood imports from Japan and Chinese consumers boycotted Japanese brands, including SK-II, out of fear of radiation contamination. P&G and other companies reassured consumers that their products were safe, but the sentiment still affected sales.
Positive Outlook for SK-II
Despite the decline in sales, P&G executives expressed optimism about the future of SK-II. Consumer research indicates improving brand sentiment, and the company expects to see sequential improvement in the second half of the year. P&G’s CEO also noted that SK-II has bounced back from previous tensions between Japan and China.
Overall Performance of P&G’s Beauty Business
P&G’s overall beauty business reported flat volume for the quarter. While the company’s earnings exceeded Wall Street’s estimates, its sales fell short of expectations. Nonetheless, P&G’s stock rose 4% in afternoon trading following the earnings report.
Conclusion
The decline in SK-II sales in China can be attributed to a combination of economic factors and anti-Japanese sentiment. However, P&G remains optimistic about the brand’s future and expects to see improvement in the coming months.
