LI & FUNG NEARING DEAL: Consumer goods exporter Li & Fung said that it is nearing a licensing deal with Levi Strauss to design, manufacture and market clothes for Levi’s Signature line in the U.S. The deal would allow Li & Fung’s U.S. subsidiary, Millwork Trading, to design and distribute Signature products, which will be sold at discount retailers such as Wal-Mart Stores. The deal would be effective for the fall 2004 season.

News of the proposed licensing agreement came after Li & Fung posted a 22 percent rise in first-half net profit to $53.1 million, or $414 million Hong Kong dollars, compared with the year-earlier period. The company said in a press release that it expects to see double-digit growth in sales for the second half. —David Hall

BREAKING IN: Shiseido Co., Ltd. broke into the Chinese toiletry market last month through a wholly owned subsidiary, FT Shiseido Co., Ltd.Focusing on hair care, finished products are exported from Japan and sold at such locations as department store toiletry counters and large-scale general merchandising stores through a sole agent to wholesalers.

China is the third region in which FT Shiseido is pursuing overseas expansion, following inroads into South Korea and Taiwan in 2000. “In the rapidly expanding cosmetics and toiletry market in China, the market scale is expected to reach 1.2 trillion yen ($10 billion, converted at current exchange) by 2012,” said the firm in a statement. “Within the Shiseido Group’s overall China business strategy, Shiseido will promote value-oriented marketing activities to address the demand for high-end hair care products within the Chinese toiletry market that have not been able to be covered by existing brands of the Shiseido Group up until now.”

Eighteen products will be launched initially, including the AQUAIR hair care brand, with prices ranging from $3 to $7, or, in local currency, 25 yuan to 60 yuan. The company said that, in future, its Chinese business will consist of imported products as well as those developed specifically for the Chinese market.

Hua Zhi You Company Sales Center is the sole import agent and products are marketed to retail outlets via a wholesaler of the Itochu Group based in Beijing and a local wholesaler based in Shanghai.During the remaining five months of fiscal 2003, FT Shiseido initially plans to market its products in 400 stores, targeting wholesale sales of $1.7 million, or 200 million yen. Its eventual target by fiscal 2005 is 5,000 stores and wholesale sales of $8.3 million, or one billion yen.Shiseido previously entered the Chinese market in cosmetics through its Beijing-based subsidiary Shiseido Liyuan Cosmetics Co., Ltd., which sells imported prestige cosmetics such as Cle de Peau Beaute and Shiseido, as well as carrying out the manufacture and sale of Aupres products exclusively for the Chinese market. Starting in 1994, Aupres is currently sold at 290 department stores in 78 cities. “Aupres is fast becoming the leading cosmetics brand in China,” said the firm. Shiseido also established a cooperative company, Shanghai Zotos Citic Cosmetics Co., Ltd., in Shanghai in1998. The company currently produces and sells Za, Pure Mild China, Uno, Asplir, Selfit and Whitia cosmetics, targeting China’s rapidly increasing middle classes.

In 2002, Shiseido established the Shiseido China Research Center Co., Ltd. in Beijing to conduct research into traditional Chinese medicines, with the goal of developing cosmetic products for the Chinese and overseas markets. — Koji Hirano

GOING DOWN: Sales of department stores in the Tokyo metropolitan area dropped 4 percent to $1.5 billion (184.5 billion yen in local currency, at current exchange) in July compared with the same month a year ago, recording the 20th monthly decline in a row, according to the Japan Department Stores Association.

Sales of apparel products dropped 2.3 percent, marking the 10th consecutive decline. Men’s wear marked the fifth consecutive monthly drop, falling 3.9 percent compared with the same month a year ago due to slow suit sales. Women’s wear sales also fell, by 1.4 percent, the sixth monthly decline in a row. Kids’ wear sales inched up 0.7 percent, however. — K.H.

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