China Conducts Remote Investigation of Japanese Cosmetics Factory

30 Dec, 2023

China Conducts Remote Investigation of Japanese Cosmetics Factory

The recent incident involves Chinese regulators scrutinizing the operations of a Japanese cosmetics manufacturer, Hoyu Co, particularly focusing on its hair-coloring product plant located in Japan's Aichi Prefecture. This rare probe, primarily conducted through online channels, resulted in Chinese authorities halting the import of Hoyu Co's products into China.

The investigation, initiated by China’s National Medical Products Administration, raised concerns over potential breaches of Chinese production control laws. It highlighted discrepancies in Hoyu Co's manufacturing processes at their plant in Seto, Aichi Prefecture, specifically regarding hair-coloring products. Allegations suggest that the disclosed information about manufacturing procedures differed from the actual processes observed by the Chinese regulators.

In response to the regulatory scrutiny, Hoyu Co chose not to contest the investigation, instead opting to collaborate with Chinese authorities to resolve the compliance concerns. The company's approach indicates its intent to continue business operations in the significant Chinese market.

However, this incident has raised broader concerns within the industry and among analysts. There are apprehensions about its potential impact on trade relationships between Japan and China, particularly in the cosmetics sector. Analysts speculate that China's investigation might not solely aim at regulatory compliance but could also be an attempt to gain insights into Hoyu Co's technology and production processes. This move could potentially serve as a warning to the entire industry about compliance with Chinese regulations.

The incident comes amid recent challenges faced by Japanese businesses in the Chinese market, stemming from various geopolitical factors such as the Fukushima nuclear plant's treated water release and the detention of Japanese nationals over espionage accusations. These events have strained Japan-China trade relations, adding complexity to the current investigation involving Hoyu Co.