Diana Dodson, market analyst for Euromonitor International told CosmeticsDesign-Europe that, "At present Japanese firms have the scope to expand abroad and to become region-wide players - tapping into dynamic markets including China, India and Indonesia." "However, the Western Multinationals are similarly targeting these markets, and whilst Japanese players have the local knowledge advantage, they still face tough competition". The recent Euromonitor report, 'Could Western beauty firms be under threat?', posted worrying figures for Western multinationals, showing that Japanese firms are creeping up in the list of top ten global ranking personal care players. Japanese cosmetics player Kao became a top-ten ranked company for the first time last year, knocking German based Henkel out of tenth place, after driving up its global market share to nearly three per cent. The company edged in by one percentage point following the successful acquisition of Kanebo cosmetics, and was also helped by a strong and steady economic recovery in its domestic market, which has been tipped for further growth in the future. However, despite this surge in popularity Dodson has stated that the there is no impending cause for concern for the larger Western manufacturers, who continue to have a strong hold on the industry. "Despite their potential for global expansion, the Japanese players remain largely focused on their home market, which, while massive is fairly mature and under pressure in a lackluster economic environment" she said. Indeed, Western manufacturers are maintaining a strong foothold in this market due to their internationally recognised brand names, which hold a certain 'cachet' for consumers. There is also some strong ill feeling from the lucrative markets such as China, India and Indonesia towards Japan, following cultural issues that flared up in 2005. Dodson continued "There is an issue of anti-Japanese feeling in the region. Emotions flared up in China in 2005 over a dispute about the portrayal of World War II in a Japanese history book. Anti-Japanese sentiment also remains strong in South Korea. Despite the Western manufacturers being reassured of the safety of their status at the top of the Asian market, industry insiders have advised them to consolidate this lead by creating a greater focus on the development of brands especially targeting the needs of Asian consumers. "This is already starting to happen, with a lot of Western firms establishing R&D centres in the region to study Asian skin and hair".
Despite recent news that larger Japanese players are gaining momentum on Western cosmetic manufacturers, industry insiders have stated that there is no real, imminent threat.