The company will set up a wholly owned manufacturing subsidiary in Vietnam next month and begin construction of the new facility in December in southern Bien Hoa, just outside Ho Chi Minh City, the company said in a statement.

It will invest four billion yen (40 million dollars) in the factory, which is expected to be completed in October 2009 and begin operating two months later.

The factory aims to improve Shiseido's supply of products to southeast Asian markets, which continue to grow at a brisk pace, the firm said.

Amid lacklustre sales in Japan where the population is both ageing and shrinking, Shiseido is increasingly looking to overseas markets such as China to drive its growth.

It opened its third Chinese factory in Shanghai last September.

The group said about 36 percent of its total sales came from overseas in the current fiscal year ending this month.

China "will continue to be the core focus" of its strategy, it added.