In March 2026, an announcement sent ripples through the beauty community—the Japanese Kao Group's makeup brand KATE (Kate Spade) issued successive closure notices, with its official Tmall and Douyin flagship stores set to cease operations on April 1. This "pioneer of affordable Japanese cosmetics," boasting over 2.3 million followers and monthly sales of 100,000 units for its star product, the three-color eyebrow powder, marked a significant contraction in its channel footprint during its 16th year in the Chinese market.
Responding to speculation about a "withdrawal from the Chinese market," the Kao Group provided an official explanation: "Based on the needs of overall strategic adjustment and business resource optimization." However, behind this corporate rhetoric lies not only a brand's channel realignment but also a microcosm of the decline of the entire Japanese cosmetics sector in China, as well as the difficult choices multinational beauty giants face amidst fierce competition from domestic brands.
The closure of KATE's stores represents a long-planned "strategic abandonment." According to the closure notice issued by KATE, its official Douyin and Tmall flagship stores will officially close on April 1, 2026, halting product sales. Online customer service will continue until April 30, and consumers must redeem or refund any brand points and stored balances by March 31.
It is noteworthy that only KATE's directly-operated flagship stores in mainland China are being closed, while its Tmall Global flagship store, JD.com flagship store, and JD.com self-operated flagship store remain operational. This indicates that Chinese consumers can still purchase KATE products through cross-border channels, but the brand's operational model in the Chinese market has fundamentally shifted—from localized deep cultivation to a lighter, cross-border e-commerce approach.
At the time of the closure announcement, KATE's official Tmall flagship store still had a substantial follower base of 2.3 million, making it the brand's largest online stronghold across all channels. The closure of a store with such a vast user base cannot be simply explained by poor management.
The direct driver behind KATE's closure stems from the global strategic adjustments of its parent company, the Kao Group. In early 2023, Kao announced a three-year structural reform plan centered on "selection and concentration"—streamlining approximately 50% of its cosmetic brands, phasing out underperformers, consolidating overlapping channels, and concentrating resources on high-end lines and functional skincare categories.
The effects of this strategic shift were already evident in Kao's 2025 financial report. The report showed that the group achieved annual net sales of 1,688.6 billion yen, a 3.7% year-on-year increase; operating profit reached 164.1 billion yen, up 11.9%; and net profit attributable to owners of the parent company was 120.1 billion yen, an 11.4% increase. Notably, the cosmetics business performed exceptionally well, with net sales of 261.6 billion yen, a 6.9% increase, and a profit of 10.4 billion yen, turning a loss from the previous year into a gain.
However, behind this impressive financial report, KATE's fate had already been quietly rewritten. Kao Group explicitly identified six brands—SENSAI, MOLTON BROWN, KANEBO, Sofina, Curél, and KATE—as key global growth brands for focused development. Yet, in the specific execution within the Chinese market, Kao clearly adopted a differentiated strategy: increasing localized investment in functional skincare brands like Curél and Freeplus, while scaling back direct operations for affordable makeup brands like KATE, shifting them towards cross-border operations.
Kao Group stated to the media that "currently, KATE's sales in China will fully focus on online cross-border flagship store channels." This implies that KATE's direct operations in mainland China have been downgraded, and its future presence will be maintained through a lighter, cross-border model.
In fact, KATE's retreat from the Chinese market did not begin recently. As early as 2021, reports emerged that KATE's offline counters were being cleared and withdrawn, indicating a significant contraction in physical channels. At that time, many consumers speculated that KATE might be preparing for a complete exit from the Chinese market.
From the withdrawal of offline channels to the scaling back of online presence, KATE's path in China is gradually becoming marginalized. Within Kao Group's strategic blueprint, the logic behind this adjustment is clear: against the backdrop of continuously rising traffic costs on platforms like Tmall and Douyin, the operational pressure on direct flagship stores for affordable makeup brands like KATE has intensified. Rather than struggling with high traffic costs, it is more strategic to scale back direct operations, revert to cross-border models, and concentrate resources on high-end brands and functional skincare categories with greater profit potential.
KATE's closure is not an isolated incident but reflects a broader cooling trend for Japanese cosmetics in the Chinese market. From declining market share to diminishing brand visibility, Japanese cosmetics are undergoing a profound crisis of confidence and structural adjustment in China.
KATE's initial success in the Chinese market was built on its core advantage of "premium quality at an affordable price." However, this edge has been completely overturned in recent years by the intense competition from domestic makeup brands.
According to data from the China Fragrance and Cosmetics Association, the market share of domestic brands has grown for five consecutive years, surpassing 50% in 2022 and further increasing to 57.37% by 2025. Brands like Perfect Diary, Florasis, Judydoll, and Flower Knows have emerged one after another, offering eyeshadow palettes and eyebrow powders for mere tens of yuan. These brands not only offer lower prices but also boast rapid product iteration, accurately tracking beauty trends and breaking through via collaborations and scenario-based marketing.
In contrast, KATE has continued to rely for years on star products from over a decade ago, such as the three-color eyebrow powder and foundational eyeshadows, with few new products gaining significant traction. Netizens have quipped, "KATE's eyebrow powder is too durable; one compact lasts for years, leading to low repurchase rates and unsustainable operations." This joke highlights the deeper issue of slow product iteration and the difficulty in stimulating ongoing consumer purchases.
Data from Douyin channels further illustrates the problem. In January 2026, domestic brands occupied 7 spots in the top 20 sales ranking for the makeup category. By February, domestic brands expanded their advantage, claiming 16 of the top 20 spots, leaving only four international brands: Yves Saint Laurent, Lancôme, Mistine, and Armani. More notably, the top spot in February's makeup sales ranking was claimed for the first time by the domestic brand DPDP, surpassing international giants like Yves Saint Laurent. Meanwhile, Japanese brands were completely absent from the Douyin makeup top 20 list for January-February 2026.
Beyond shifts in market competition, evolving consumer psychology is also profoundly impacting the appeal of Japanese cosmetics. In recent years, Chinese consumers have shifted their focus from "brand origin" to "ingredient efficacy" and "authentic experience," showing a preference for products with clear benefits and strong scientific backing.
The traditional Japanese cosmetics emphasis on "textural experience," "exquisite packaging," and "affordable drugstore prices" has seen its premium ability decline in the wave of efficacy-focused skincare. In contrast, domestic brands, with their deep understanding of local consumers, excel in product efficacy and ingredient marketing.
Additionally, while the discharge of treated nuclear wastewater from Japan did not trigger widespread boycotts, it sowed seeds of doubt regarding the safety of Japanese products among some consumers. This subtle erosion of consumer confidence often becomes a "deduction point" during purchase decisions.
The combination of internal and external factors is lowering the overall "perceived temperature" of Japanese cosmetics in the Chinese market. Data shows that Japan's cosmetics exports to China fell by 27.0% year-on-year in 2024. Although there was a rebound in 2025, the growth was limited. Major Japanese companies like Shiseido and Kose have generally seen slowing growth in the Chinese market over the past two years, with some brands even experiencing store closures and channel adjustments.
On a deeper level, the cooling reception for Japanese cosmetics in China reflects a structural dilemma: as the consumption logic in the Chinese market shifts from "brand-oriented" to "user-oriented," and from "following trends" to "expressing individuality," the strengths of Japanese brands—standardized production, refined packaging, and meticulous channel operations—are being surpassed by the agility, content co-creation, and emotional connection offered by domestic brands.
KATE's lack of localization is particularly evident. The Chinese beauty market has long entered the era of online traffic, with platforms like Douyin and Xiaohongshu being core grounds for product seeding and conversion. However, as a foreign brand, KATE's localized marketing efforts have been relatively slow, leading to a gradual decline in brand visibility. Analysis suggests that foreign brands like KATE often sell global uniform products with slower iteration cycles, making it difficult to keep pace with the changing demands of Chinese consumers.
Wu Daiqi, CEO of Shenzhen Siqisheng Company, analyzed: "On one hand, the rise of local brands, with their innovative product designs and ability to capture online traffic, has won the favor of young people. The rise of beauty multi-brand stores has also been a huge impact on former chain brands. On the other hand, beauty brands ultimately represent a culture and lifestyle. Currently, the appeal of Japanese and Korean lifestyles and culture to young Chinese people has declined."
Zhang Yi, CEO of iiMedia Research, pointed out from a product innovation perspective: "The reasons for KATE's store closures are multifaceted. The direct cause is Kao Group's decision to adjust its portfolio of low-margin, affordable brands. The deeper reason lies in KATE's inadequacies in product innovation and adaptation to the Chinese market, causing it to lose competitiveness compared to local brands."
Faced with a cooling Chinese market, Japanese cosmetics giants are not standing still. Strategic moves indicate that these companies are generally adopting a dual-track approach: first, upgrading towards premiumization, concentrating resources on high-average-order-value, high-margin premium lines; second, increasing R&D investment, attempting to reshape brand image through scientific narratives.
The Shiseido Group explicitly stated it would "respond to market changes with premiumization," focusing on promoting ultra-premium brands like CPB and The Ginza in China, while gradually handing over mass-market brands to local partners for operation. The Kose Group announced in early 2024 that it would restructure its Chinese operations, closing some underperforming stores and concentrating resources on premium brands like Cosme Decorte.
Similarly, the Kao Group is focusing on cultivating the sensitive skin care brand Curél and the high-end makeup brand Suqqu. Kao stated that it is actively advancing the pace of localized product development for its brands "Freeplus" and "Curél" in the Chinese market, focusing on meeting the needs of Chinese consumers. These two brands have already launched locally produced goods in China.
However, premiumization is not a panacea. Competition in China's high-end cosmetics market is already fierce, with European and American brands dominating through strong brand heritage and scientific prowess, while domestic premium brands are rapidly catching up. For Japanese brands to break through in the premium segment, they must overcome shortcomings like insufficient brand premium and weak scientific narratives.
Furthermore, mere premiumization does not address the "crisis of relevance" that Japanese cosmetics face among core consumer groups. The younger generation of consumers places greater importance on whether a brand can resonate emotionally with them and integrate into their lifestyle. In this regard, the localized operational capabilities of Japanese brands noticeably lag behind those of domestic brands.
The closure of KATE's stores marks the end of an era. It was once the introductory brand in the makeup bags of countless Chinese women, witnessing the golden age of affordable Japanese cosmetics in China. However, as the triple waves of domestic brand rise, consumption upgrade, and channel transformation converge, the "value-for-money" advantage once prided by brands like KATE has vanished.
Bai Yunhu, a daily chemical industry expert, once pointed out that the basic development path of mature markets globally follows a pattern: international brands initially dominate, then domestic brands begin to grow, and finally domestic brands take the lead. This has been the case in Japan, South Korea, and mature markets like the US and Europe, which are dominated by their respective local brands. Therefore, the dominance of Chinese brands in the Chinese market is likely to be a major, irreversible final outcome.
The story of KATE may not be entirely over—its overseas flagship stores remain operational, and its products have not completely exited the Chinese market. However, its channel contraction undoubtedly serves as a wake-up call for all foreign affordable brands in China: in the world's most competitive and rapidly changing beauty market, there are no permanent moats, only constant self-innovation. When the "value-for-money" advantage fades and localization capabilities are lacking, even a "pioneer of affordability" with 2.3 million followers cannot escape being strategically sacrificed.
For future Japanese cosmetics brands, securing a place amidst the rising tide of domestic brands will likely require positioning in niche segments, strengthening efficacy endorsements, and deepening localized operations. For those brands still wavering between "global uniformity" and "local needs," KATE's present may well be their future.