FT Shiseido Co., Ltd. to Commence Sales in

Shiseido Co., Ltd. (hereafter Shiseido) will commence export sales of toiletry products to China via its wholly owned subsidiary, FT Shiseido Co., Ltd. (hereafter FTS), as of July 2003. Targeted at the high-end toiletry market focusing on haircare, finished products will be 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. Initial products to be launched comprise 18 items, including AQUAIR haircare brand products.

Background In the rapidly expanding cosmetics and toiletry market in China, the market scale is expected to reach ¥1.2 trillion by 2012. Shiseido is positioning China as a particularly important overseas market, and accordingly, is entering into the high-end toiletry market in order to strengthen its business foundation directed towards further growth in the future. Within the Shiseido Group’s overall China business strategy, Shiseido will promote value-oriented marketing activities to address the demand for high-end haircare products within the Chinese toiletry market that have not been able to be covered by existing brands of the Shiseido Group up until now. China will be the third region in which FTS is pursuing overseas expansion, following inroads into Korea and Taiwan in 2000.

Business Outline 1. Product Line： The initial launch comprises 18 items, including AQUAIR haircare products, with prices ranging from 25 Yuan to 60 Yuan (¥350 to ¥840). AQUAIR is one of FTS’ core haircare brands, with a primary focus on shampoo and bathcare products. In the future, with a view toward introducing new brands developed exclusively for China by means of local production that captures the needs of the Chinese market, Shiseido is aiming to build a seamless business structure that that enables the deployment of both import and locally produced products. 2. Local Business Partners： In terms of local business partners, Hua Zhi You Company Sales Center will be the sole import agent and products will be marketed to retail outlets via a wholesaler of the Itochu Group based in and local wholesaler based in . Retail will be developed through department store toiletry counters and large-scale general merchandising stores, which are the major retail channels of the toiletry market, focusing on coastal areas with a massive consumer market. 3. Sales Plan： During fiscal 2003, FTS initially plans to market its products in 400 stores, targeting wholesale sales of ¥200 million (five-month period) in China, while working to expand its retail outlet base to include 5,000 stores, targeting wholesale sales of ¥1 billion in fiscal 2005.

Shiseido in China In designating China as one of the markets with the highest growth potential worldwide, Shiseido is aggressively pursuing business expansion via its operational bases in Beijing and Shanghai. As a whole, the Shiseido Group achieved sales totaling ¥17 billion in fiscal 2002 in China, and is targeting ¥20 billion in sales in 2003. Based in Beijing, Shiseido Liyuan Cosmetics Co., Ltd., which is implementing counseling sales for high-end, prestige products, markets and sells imported prestige cosmetics such as Clé de Peau BEAUTÉ and SHISEIDO brand products, as well as carrying out the manufacture and sales of AUPRES cosmetic brand products exclusively for the Chinese market. Since the start of sales in 1994, AUPRES has become particularly popular and is currently sold at 290 department stores in 78 cities, attaining the top share at 90% of the stores in which it is sold. As a result, AUPRES is fast becoming the leading cosmetics brand in China. Shiseido also established a cooperative company, Shanghai Zotos CITIC Cosmetics Co., Ltd., in Shanghai in 1998. 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 Shiseido China Research Center Co., Ltd. in Beijing to conduct research into traditional Chinese medicines in promoting the development of cosmetic products for the Chinese and overseas markets. The launch of toiletry products by FTS enables the Shiseido Group to cover the demand for high-end haircare products within the toiletry market together with further establishing a foothold in the prestige and middle-class cosmetics markets in China, thus further enhancing the Shiseido Group’s collective strengths.

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FT Shiseido Co., Ltd. Beijing Representative Office Representative staff: Two persons Company name: FT Shiseido Co., Ltd., Beijing Office Location: Rm.1413-1414, Hua Bin International Building, No.8, Yong An Dong Li, Jian Guo Men Wai Ave., Chao Yang , Beijing, China

Sole Agent Hua Zhi You Company Sales Center Company name: Hua Zhi You Company Sales Center Location: No.2 Hong Da Bei Road, Beijing Economic Technological Development Zone, Beijing, China Representatives: Mr. Tong, President & CEO

Overview of the Local Distribution Base and Regional Wholesalers Distribution base Company name: Beijing Pacific Logistics Co., Ltd. Location: 1-zu 3-hao Gong Ye-qu, Niushan Town, Shunyi-qu, Beijing, China

Beijing wholesaler Company name: Beijing Itochu-Huatang Comprehensive Processing Co., Ltd. Location: 5/, Office, Bld, City Plaza, Shilipu, Chaoyang District, Beijing, China

Shanghai wholesaler Company name: Shanghai Y&F Daily Chemical Co., Ltd. Location: Room 1801, Liulin Mansion, No. 1 Hualhal Zhong Road, Shanghai, China

Shiseido Liyuan Cosmetics Co., Ltd. Company name: Shiseido Liyuan Cosmetics Co., Ltd. Representatives: Mr. Yasutaka Mori, Chairman Mr. Yukihiro Takano, President & CEO Establishment: December 1991 Location: No.2, Hong Da Bei Road, Beijing Economic Technological Development Zone, Beijing, China Capital: 94.3 million Yuan (approximately US$11.4 million or ¥1,480 million; investment ratio: Shiseido Co., Ltd. - 65%; Beijing Liyuan Cosmetics Co., Ltd. -35%) Number of employees: 1,400 Business lines: Import and manufacture and sales of cosmetics products

Shanghai Zotos Citic Cosmetic Co., Ltd. Company name: Shanghai Zotos Citic Cosmetic Co., Ltd. Representative: Mr. Masaru Miyagawa, President & CEO Location: Shanghai CITIC-Power Zhanjiang Industrial Park Capital: US$31.2 million (approximately ¥3,700 million; US$1=¥119);investment ratio: Shiseido Co., Ltd. - 88%; CITIC EAST CHINA (GROUP) Co., Ltd. - 12% Business line: Manufacture and sales of cosmetics products