"Our immediate target is to establish Kao cosmetics' presence in China. We weren't successful in selling detergent, shampoo and soap even after a decade of sales efforts there, now is the time to change tactics," said company president Takuya Goto.
Kanebo has 11 cosmetics sales subsidiaries in Japan and 14 overseas, while Kao has only one in Japan. Kanebo's brands range from inexpensive to luxury goods, compared with Kao's focus on selling cosmetics at drugstores, according to analysts, UFJ Tsubasa Securities.
Kanebo has been in China since 1992 and expects to double the 150 departments stores it already sells at.
Kao's purchase of the Kanebo cosmetics stake will therefore help Kao close the gap with its biggest Japanese rival Shiseido in their 1 trillion-yen home market. Shiseido generated 481.9 billion yen from selling cosmetics such as skin lotion and lipstick worldwide in the year ended 31 March, almost double the combined sales of Kao and Kanebo.
L'Oreal, the world's biggest cosmetics maker, claims China's skincare market totals about €1 billion euros and grew 20 per cent in 2002.
China's economy is expected to grow about 9 per cent this year, the fastest by any large economy in the world.