Fukushima Water Controversy Dampens Kao's Sales in China

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Fukushima Water Controversy Dampens Kao's Sales in China

Cosmetics company Kao Corp. has attributed a recent drop in sales in China to the ongoing controversy surrounding Japan's release of treated radioactive water from the Fukushima nuclear plant into the sea.

At a news conference held on February 7th, President Yoshihiro Hasebe expressed concern over the situation, stating that the decline in sales exceeded their expectations.

Kao, which also offers household products, has refrained from promotional activities in Chinese storefronts due to ongoing protests encouraging consumers to boycott Japanese cosmetics.

In August, the operator of the Fukushima No. 1 nuclear plant, Tokyo Electric Power Co., commenced discharging treated water into the Pacific Ocean, sparking further backlash.

In 2023, Kao's sales in China witnessed a significant drop, with a 23 percent decrease compared to the previous year. This decline was more substantial than the 9 percent reduction experienced in 2022, when the implementation of strict lockdown measures under China's zero-COVID policy impacted sales.

While the world remains concerned about signs of economic stagnation in China, Hasebe emphasized that the treated water issue poses the most severe challenge to Kao's business operations.

The company anticipates that the repercussions from the water discharge program will continue until the first half of 2024.

Overall, Kao's sales in 2023 experienced a 1.2 percent decrease to 1.53 trillion yen ($10.28 billion), while operating profit declined by 45.5 percent to 60 billion yen due to restructuring costs associated with discontinuing paper diaper production in China and consolidating cosmetics brands.