Shiseido Launches Progressive Makeup Line in China A Passport to Contemporary Beauty The Debut of New AUPRES Makeup for “Chinese Women of the New Millennium”

From January 2004, Shiseido launched its new AUPRES Makeup line (8 items, 56 items, price range: RMB35-120) for “Chinese women of the new millennium” at roughly 350 AUPRES counters throughout China via its joint venture company, Shiseido Liyuan Cosmetics Co., Ltd. Popular actress Vicky Zhao Wei, who enjoys a successful career mainly in China as well as Asia, has been appointed image model. She will be featured on posters, magazine ads, Internet advertising and in Shiseido’s first Chinese TV commercial, which is to be broadcast from late December 2003 onwards primarily in the Beijing and Shanghai areas. Spearheading the launch, a press conference was held on December 22 of this past year at the Yan Club Art Centre, a complex that is making a name for itself among Beijing’s art community as the hub for transmitting cultural information. Additionally, six-day promotional events were staged from December 23 in Beijing and December 30 in Shanghai. Ms. Zhao Wei appeared on the first day at both events to promote the new line. With the launch of the new AUPRES Makeup line, Shiseido will impart new value by incorporating a greater sense of fashion and style to its AUPRES brand, which has won customers’ trust for its superb quality, excellent usability and effectiveness, and is planning to grow the AUPRES brand into a mega brand achieving sales of ¥30 billion (retail basis) by 2008. *Shiseido’s plans for China include the development of its existing business, establishment of a holding company, expansion of its chain

of Shiseido cosmetic specialty stores and further cultivating the growth of the AUPRES brand, with the aim of boosting overall sales

from the current level of ¥20 billion to ¥100 billion (retail basis) by 2008.

Background to the Launch – From Appearance to the Age of Self-Expression –

Existing AUPRES Makeup products were introduced concurrently with skincare products when the AUPRES brand was initially launched as a range of cosmetic products developed exclusively for the Chinese market in January 1994. At that time, the accepted norm was to use makeup to smarten one’s appearance, and the majority of Chinese women chose pink or rose-based eye shadows and lipsticks that produced a natural look and were easy to use. In tandem with the renewal of the line and the launch of new products in January 1999, Shiseido employed the skincare-based concept of “moisture makeup” and emphasized the improved functionality of ingredients, with colors and a package design following existing makeup trends. Phenomenal economic growth in China in recent years has contributed to a rise in income levels. Moreover, as a result of opening its markets, the launch of fashion magazines and full-fledged market entry of foreign-invested cosmetics manufacturers has led to an increase in the amount of information and products, in turn generating greater levels of interest in fashions and trends along with rapid growth in the number of women who use prestige cosmetic products. Chinese women have now entered an age in which, more than ever before, they are actively enjoying using makeup as a tool to express their beauty.

New AUPRES Makeup

New AUPRES Makeup is a line based on the concept of Contemporary Beauty, whereby the range has been created to support “Chinese women of the new millennium,” who are overflowing with confidence and pride and are cognizant of their yearning to evoke their own appeal and allure. Featuring high-grade colors denoting the latest fashion and innovative packaging that combines both a feminine and contemporary impression, the new line has also been given a boost in terms of functionality, with longer-lasting moisturizing effects to match the skin and preferences of Chinese women and local climate conditions. New AUPRES Makeup also firmly meets the needs of those individuals at the vanguard of fashion as a top-quality, sophisticated and progressive makeup line.

The AUPRES Brand

AUPRES, meaning “beside or “close to” in French, made its debut as an exclusive Chinese cosmetics brand in January 1994. Based on Shiseido’s underlying mission to continue its focus on the skin of Chinese women and help them to become beautiful, skincare and makeup product ranges were followed up with the launch of additional lines, including AUPRES White (May 1995), AUPRES Sun Care (May 1998), AUPRES Fragrance (November 1998), and AUPRES DX (November 1999). In spite of entry-level salaries for university graduates in major cities such as Beijing of around RMB500 per month and set prices of RMB105 for AUPRES cream and RMB90 for a single lipstick, the outcome of continuing promotion of value-oriented marketing activities dedicated to high quality, high service and high image and targeted at savvy Chinese women seeking authenticity is that AUPRES has become firmly established among Chinese women as a national brand, and has secured the top share at 90% of the roughly 350 department stores in which it is sold. Furthermore, JS, an extensive range of cosmetics for men launched from AUPRES in October 2002, has been very well received since the start of export sales to the United States in September 2003.

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Pr oduct Overview

Product Price Features AUPRES RMB120 This new lipstick provides high-performance Triple Effect Lipstick moisturizing effects that are unaffected by dry air or 16 shades, 3.5g cold winds with a rich variety of colors and textures for a fresh and lustrous finish. AUPRES RMB100 This lip gloss provides high-performance Triple Effect Lip Gloss moisturizing effects unaffected by dry air or cold 6 shades, 7g winds with a glittering texture that gives the appearance of light reflected on water for innocent-looking lips. AUPRES RMB115 This eye shadow provides high-performance Dual Treatment Eye Shadow treatment effects that are unaffected by dry air or 6 items, 4g cold winds with a clear and lustrous two-color set for clean and vibrant eyes. AUPRES RMB120 A duo of colors with high-performance treatment Dual Treatment Blusher effects that are unaffected by dry air or cold winds, 4 items, 5g creates translucent skin color and a radiant look. AUPRES RMB115 Two eyebrow colors and one shade of eye shadow Eye Zone Creator make it easy to create beautiful brows and cool eyes. 2 items, 3.5g + 1.5g Press-type colors for the eye zone. AUPRES RMB90 Oval cartridge-type eye pencil smoothly draws both Fine Finish Brow Liner thick and fine lines with ease 3 colors, 0.16g AUPRES RMB35 Cartridge refill for Fine Finish Brow Liner Fine Finish Brow Liner Cartridge 3 colors, 0.16g AUPRES RMB55 A medium-sized quick-drying nail enamel for an Fine Finish Nail Enamel instant finish. 16 shades, 7ml

Pr ofile of New Image Model

Name: Vicky Zhao Wei Birthplace: Anhui Province, China Date of birth: March 12, 1976 Occupation: Actress, singer, model Biography: Ms. Zhao Wei achieved explosive popularity after starring in a Taiwanese TV drama while attending the Beijing Film Academy, bursting onto the scene to become a top idol in Mainland China. She has released a number of albums as a singer and appeared in the films “Shaolin Soccer” and “So Close,” which were also screened in Japan. She co-starred with Japanese actor Kiichi Nakai in “Warriors of Heaven and Earth,” which was given a special screening at the 16th Tokyo International Film Festival in November 2003 (scheduled for nationwide release on February 21, 2004).

Chinese Women and AUPRES Makeup

The Early Years (1992~1997) When development of the AUPRES brand commenced in 1992, the cosmetic habits of Chinese women were “a simple regime, with skincare comprising the use of a cream after washing the face with soap, and makeup comprising the application of a cream foundation, topped off with face powder and a touch of lipstick,” recalls Mina Takachi (Shiseido International Marketing Division), the person in charge of product development for the AUPRES brand. Moreover, a preliminary survey revealed that with numerous dry regions in China, many women had fine-textured, yet dry complexions. As for makeup, this was a period when women tended to shy away from glamorous-looking cosmetics and remnants of the belief that makeup was bad for the skin still lingered. Given such circumstances, the development concepts for the range of skincare products launched in 1994 were two-fold: beauty products that “protect the skin against a harsh natural environment, supplying moisture for healthy-looking skin” and that give a “natural moisture balance.” Marketing for the makeup products launched simultaneously focused on their skincare effects, with the lineup featuring a range of natural colors that were aimed at fostering familiarity with and confidence in using the products as items to beautify one’s appearance, even among women who were using makeup for the first time.

The Flowering Years (1997~2001) Hong Kong’s reversion to Chinese rule in 1997 and membership in the World Trade Organization in 2001 opened the doors to Mainland China markets even wider. Rapid economic development contributed to a rise in average income, and the launch of fashion magazines and full-scale market entry of foreign-invested cosmetics manufacturers led to increased availability of information and more products, in turn fueling a sharp increase in the number of women who use prestige cosmetic products, and thereby ushering in a period of prosperity in the cosmetics market. On this basis, in January 1999 Shiseido revamped its AUPRES makeup line, bolstering the skincare functionality of product ingredients based on the concept of “moisture makeup,” adding new colors to the range and changing the existing dark blue of the packaging to a more vibrant beige marble. Actress Yukie Nakama has been the image model since 2001.

The Growth Years (2001~) The Chinese cosmetics market, inclusive of toiletries, is currently said to be on the scale of ¥560 billion (roughly half the value of the Japanese market). As the nation looks towards the Beijing Olympics in 2008 and the Shanghai Expo in 2010, it is believed that the lives of its citizens, particularly those living in urban areas, will become increasingly plentiful, and that consumption will grow to even greater heights. With cosmetic sales in the China market forecast to reach approximately ¥1.2 trillion by 2012, the cosmetics industry is entering a period of sustained growth. As evidenced by sales of the AUPRES brand, skincare is now an integral part of the daily routine among Chinese women and the age in which women feel free to enjoy makeup as a means of self-expression is now here. In January 2004, AUPRES Makeup will be reborn as a new makeup line at the frontfront of the era that delivers a sense of greater prestige and style. Dai Li Nan (Shiseido International Sales Division), who is engaged in the introduction and cultivation of Shiseido cosmetics in the Chinese market, speaks enthusiastically about the new makeup line: “This makeup line will enable Chinese women to bring forth new levels of beauty and allure. It truly is a passport to contemporary beauty. I sincerely hope that women from abroad who are visiting China will also try out the new line’s quality and colors.” Even women who keep an eye on makeup trends in Japan, where the cosmetics culture has reached maturity, will want these previously unavailable items from the new AUPRES Makeup line created for Chinese women of the new millennium. The History of AUPRES

Dates Content December 1991 Establishment of Shiseido Liyuan Cosmetics Co., Ltd. (SLC) January 1994 Launch of AUPRES cosmetics exclusively for the Chinese market (skincare and makeup) May 1995 Launch of AUPRES White line May 1998 Launch of AUPRES Sun Care line November 1998 Launch of AUPRES Fragrance line January 1999 Renewal launch of AUPRES Makeup March 1999 Launch of AUPRES Oil Control line November 1999 Launch of AUPRES DX line August 2000 AUPRES Sun Care endorsed as the official cosmetic products for Chinese athletes participating in the Sydney Olympics September 2000 AUPRES designated as an honorary product of Beijing January 2001 Launch of millennium commemorative AUPRES Moisture Lip Color March 2001 Renewal launch of AUPRES White line July 2001 AUPRES endorsed as the official cosmetics brand for Chinese athletes participating in the 2004 Athens Olympics October 2001 Launch of JS extensive range of men’s cosmetics from AUPRES March 2003 Completed renewal of AUPRES sales counters in line with the launch of AUPRES Balancing line January 2004 Launch of new AUPRES Makeup line