European companies welcome Japan’s abolition of import notifications on cosmetics and quasi-drugs
European cosmetics companies have applauded the decision by the Japanese government to abolish (since 1 January) import notifications on cosmetics and quasi-drugs as “great progress”.
The changes, announced by Japan’s Ministry of Health, Labour and Welfare, followed many years of pressure for change, notably by the European Business Council in Japan (EBC), whose member companies say the new rules will “significantly simplify import procedures”.
They warn, however, that a number of important hurdles remain to be overcome for foreign manufacturers to fully access Japan’s lucrative market.
Before the changes, foreign cosmetics companies seeking to import their products into Japan were required to submit two different notifications to Japanese regulators, with a great deal of duplicate information in the two sets of paperwork, said Tsutae Kogure, of LVMH Cosmetics in Japan, a member company of the EBC’s cosmetics and quasi-drugs committee.
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The first set of paperwork was a ‘notification on manufacture and sales’ and the second set of papers dealt with ‘import notification’ and had to be provided before any cosmetics or quasi-drug products could proceed through Japanese customs.
The entire procedure was “time-consuming” and “duplicative”, an official of a foreign cosmetics company told SPC magazine.
One of the key requests from foreign manufacturers was for the introduction of an electronic import notification system, designed to eliminate the “current, burdensome paper-based notification process”, as well as reducing the number of supporting documents that need to be provided.
Since 1 January, however, importers have only needed to provide a business licence and approval certificate for products.
The significance of any measures that serve to streamline import procedures is clear. Sales of cosmetics products yielded Japanese yen ¥1.49 trillion (US$12.6bn) in 2014, with imports accounting for ¥226bn ($1.91bn) of that total. Imports from European manufacturers yielded around ¥81bn ($687m) in sales revenue.
“European cosmetics and quasi-drug products comprise a large share of imports because Japanese consumers recognise their value,” the EBC committee stated in its most recent annual white paper, released in December.
“However, European companies face challenges in bringing cosmetic and quasi-drug products to them in an efficient manner, due to Japan’s lack of regulatory transparency, the low degree of harmonisation between its product standards and those used in other parts of the world, and its unnecessarily complex approval and manufacturing requirements,” said the report by the EBC, whose cosmetics and quasi-drugs committee is chaired by Dr Nobuyuki Hagiwara, who is also Head of Regulatory Affairs for Johnson & Johnson KK in Japan.
“As a result, the launch of many European cosmetic products in Japan is severely delayed, even though the same products are in global use and have clinically proven efficacy,” said the paper.
Some companies have even been forced to reformulate drugs because their global version uses new active ingredients for which approval is too time-consuming or difficult to obtain in Japan. Elsewhere, ingredients that do not require regulatory approval when used in a cosmetic can require a lengthy approval process when the same ingredient is used in what Japanese regulators deem to be a quasi-drug product.
To further complicate matters, approval of products that meet existing approval standards is delegated to authorities at the prefecture level, although different prefectures apply inconsistent interpretations of how standards should be met.
The increase in complexity has inevitably had a knock-on impact on costs for the end-user, the EBC argued.
“Increasing transparency, streamlining the approval process and promoting greater regulatory harmonisation with the European Union would allow more high-value-added products to reach Japanese consumers in a timely manner,” the EBC report stated.
Japanese companies say the changes in the rules will have little impact on their operations, as the majority of their products for the domestic market are still manufactured in Japan, although it is possible they will lose market share to foreign cosmetics that play on their reputation as desirable imports in combination with reduced prices.
The challenge for importers and industry associations now is to build on this breakthrough concession by the ministry to tackle a number of additional pressing issues.
The EBC is keen to make advances on the “slight progress” it has seen on the harmonisation of ingredients for cosmetics and quasi-drugs and is calling for Japan to recognise safety standards that have been accepted in Europe. Another area of concern is the EU’s call for Japan to establish alternatives to animal testing for ingredients and products, again to bring them into line with accepted practice in European nations.
A spokesman for the American Chamber of Commerce in Japan declined to comment.