- Cosmetic OEM Lab
Japanese cosmetics have rising popularity around the world.
Even though it is most apparent in Asian countries, it would not be wrong if we said their reputation has been building up in western countries too, as J-Beauty is becoming a trend amongst certain people.
It is not too rare that we run into Japanese concept brands and products created by local businesses.
Japanese private label skin care industry is very small business-friendly. Thanks to the existence of smaller private label skin care manufacturers, it is possible for anyone to start their own brand on a humble budget.
In this article, we will be trying to break down how the 2 different types of private label skin care manufacturers in Japan and share some key points that come handy when choosing partners.
Japan has a very active private label industry housing hundreds of factories of different sizes across the world.
The graphic below shows how many companies in Japan have a ‘sales license for cosmetics’ and how many have a ‘manufacturing license for cosmetics’. The numbers were 3744 and 3668 respectively, as of the end of the 2018 fiscal year.
However, this does not necessarily mean that there are 3,668 private label cosmetic factories in the country. There are also quite many companies who possess this license but follow a fabless business model.
A fabless company is a company that does not have its own production facilities as they outsource its productions to factories. This is fairly common in the Japanese private label skin care industry.
It is expected that people assume all private label skin care manufacturers have factories. However, this is hardly the case in Japan.
However, there are still quite many factories of all sizes all over the country. Some of these factories have annual revenues under 1 million USD while some others may have over 200 million.
There are 2 advantages of working with such manufacturers.
When a company produces in its own factory, the costs are materials, utilities, and labor. This enables these companies to have full control of their prices and provide competitive prices when necessary.
Also, since there are no middlemen in between, it will be considerably cheaper to do business with these companies.
As these companies do everything in-house, they know what they can do and cannot both in terms of capability and pricing, without having to ask elsewhere. This enables them to be considerably quicker at responding.
We could come up with 2 main disadvantages of working with these companies.
Each factory has its own set of equipment and specialties. This means that they are limited to those and cannot go beyond them.
For people who prefer to work with a one-stop partner, it can be overwhelming, having to work with a different company for each product.
Factories tend to want volume from each client they have. Our observations tell us that most factories are not keen to work with quantities under 3,000 pieces when it’s a new client. Even if they do, they do not tend to be too eager to invest time and resources in the R&D process.
These are companies who mostly have ‘manufacturing license for cosmetics’ and are legally allowed to put their names as the manufacturer on products they participate in producing.
However, they actually stand in the middle of the client, and the manufacturer, ultimately outsourcing the manufacturing of the product to a factory.
This could be a rare business model in the world but it is fairly common in Japan since it has many advantages.
Especially considering the fact that most manufacturers in Japan do not export directly, have English-speaking staff, or are not keen to take new businesses of small quantities, there are quite a few reasons why these fabless companies exist.
These are the 2 main advantages of working with these companies.
When you have your own factory and produce everything there, you are limited to your equipment and technical abilities.
As fabless manufacturers often work with tens of different factories, they are able to outsource any kind of product to those factories on a case-by-case basis. This allows them to produce almost any kind of product ultimately leading to a sufficient one-stop service.
Most fabless manufacturers have strong connections with dozens of factories across the country. Since they have a certain volume of business with each factory, they are able to get them to manufacture in smaller quantities.
We could think of 2 major disadvantages of working with these companies.
Fabless manufacturers outsource their productions to factories which means they add their profit margins on the prices they are given by those factories.
As a result, they end up with prices significantly higher in comparison to companies that own their production facilities.
As these companies are not directly involved in the production process themselves, it happens often that they need to confirm with factories before responding.
This makes the response time slower as a result.
Even though Japanese quality standards are considered to be high in general, there will still be differences between countries in many aspects.
As you start working with a Japanese manufacturer, you want to pick the company that will be best for you and your business.
In this section, we will be breaking down 3 points we think are important when choosing that Japanese private label skin care manufacturer.
Skin care is a very broad term for many different types of products. You have creams, lotions, serums, and a whole lot of other types of products. Under creams, you have anti-aging creams, moisturizing creams, and organic creams, and so on.
So, it’s very unrealistic to expect one cosmetic OEM factory to be able to produce them all. But here is a point that most people miss out on: being capable of something doesn’t necessarily mean `being good` at it.
A company that is great at making lotions and serums may turn out to be not so good with creams.
If you’re looking for a one-stop manufacturer for different kinds of products, it could be beneficial to choose a factory with a large toolbox.
Although most private label skin care manufacturers in Japan with an English page usually have at least once exported cosmetic products abroad, the level of experience will differ from company to company.
For example, an OEM company that has only been exporting to the Asia-Pacific region will have to confront a dozen challenges when it comes to exporting to Europe.
There is no way to guarantee if they will have the power to provide countless numbers of documents required by the EU.
So, having general experience in cosmetic export is very important but it’s also important whether a company has experience in a case that’s similar to yours.
Of course, there is a first time for everything and anything can be learned with a little bit of hard work although they can be very challenging in the beginning.
But if you’re in a position where you cannot be willing to take risks, this could be an important criterion.
Private label skin care manufacturers produce the bulk, fill them into containers, do the packaging and then ship the products. In the case of exportation, they are also supposed to provide the paperwork needed to send the product.
But of course, nothing goes perfect. Problems occur all the time and they often require hard work to fix. How cooperative your private label skin care manufacturer is will play a huge role in how smooth the whole process takes place.
It will, without any questions, be to your advantage that you work with a partner who is willing to take that extra step with you to make the best out of that partnership.
You will probably be able to tell how cooperative the salesperson is while exchanging e-mails, at an early stage. If you feel that you’re not happy with the process, perhaps it’s a better idea to look elsewhere.
We explained 3 points you should keep in mind while looking for a private label cosmetic manufacturer in Japan. Now, we would like to talk about why we think we could be a good option for you.
As we are a fabless company ourselves, we are not limited by our manufacturing capabilities. We have 50+ partner companies throughout the country whom we know what they’re good at.
We helped dozens of clients manufacture hundreds of products of a huge variety, both in domestic and international markets.
Skincare to hair care, body care, makeup, supplements. We are capable of helping you with anything related to cosmetics and supplements.
It is a fact that most people want to start with small lots as they don’t want to take big risks or simply don’t have the capital.
In OEM Co., Ltd., we’ve always been cooperative with our clients who order in small lots. We take pride in our flexible correspondence and cost-effective solutions for low quantity orders.
We like to think that we make things easier for our clients as a one-stop service.
We can manufacture skincare products, makeup products, quasi-drugs, hair care products, body care products, supplements, pet cosmetics and so on.
This is very convenient for people who don’t want to look for a new private label cosmetic manufacturer every time they want to make a new product.
We take care of container and packaging material procurement as well as proposing them. Also, we give as much support as we can regarding importing procedures as well.
In this article, we discussed the key points in choosing a cosmetic OEM company in Japan. Then we tried to explain why we think we could be a good option as a business partner.
There are actually hundreds of private label skin care manufacturers in Japan. Although a small portion of these companies are exporters, there are still quite a few companies to import private label cosmetic products from Japan as well.
Yet, not all of them will be what you’re looking for. As we believe it is very important that you do business with a company that will fulfill your expectations in the long run, we suggest that you be picky from the beginning.
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