From October through December, SK-II, a high-end skincare brand owned by Procter & Gamble (P&G), saw a 34% drop in sales. Both China’s sluggish economic recovery and anti-Japanese sentiment exacerbated by geopolitical events were cited by P&G executives as reasons for this fall.
Damage from the 2011 devastating tsunami forced Japan to release treated radioactive water from the Fukushima nuclear power facility, a move that China vehemently opposed. China has banned all Japanese seafood imports, even though the UN has assured the public that the water is safe to drink. Chinese consumers were so misled by disinformation operations that they boycotted SK-II and other Japanese products.
SK-II Faces Challenges Amid Anti-Japanese Sentiment and Geopolitical Tensions
Rocks were thrown at Japanese schools and hundreds of angry calls were made to businesses in Fukushima, just two examples of the many ways anti-Japanese sentiment showed itself. P&G officials did point out that SK-II’s sales had been on the upswing recently, thanks to consumers’ more positive attitudes. According to P&G CFO Andre Schulten, “Our consumer research indicates SK-II brand sentiment is improving, and we expect to see sequential improvement in the back half.” This gives the CFO reason to be optimistic.
The Chinese public has shown their disapproval of SK-II and other Japanese companies on multiple occasions. The 2012 anti-Japanese protests that broke out in China over a territorial dispute caused Japanese automakers to halt production and targeted their showrooms with violence. Additionally impacted were companies such as Aeon, Uniqlo, and Sony.
Even if SK-II’s sales took a hit due to past disputes, the brand always managed to bounce back, according to P&G CEO Jon Moeller. Despite a one-time charge associated with its Gillette division reducing P&G’s annual profit estimate, demand for the company’s daily-use products in grooming and home care stayed strong despite price increases, contributing to mixed overall profitability.
This case study illustrates how anti-Japanese sentiment and geopolitical tensions in China can have a major effect on the popularity and profitability of foreign brands. With SK-II’s sales seeing a recent upswing, it’s unclear how geopolitical dynamics would impact regional customer behavior going forward.
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