COSMETICS COMPANIES IN SOUTH KOREA
Nine cosmetic companies are listed on the Kospi index — the index for South Korean stock exchange — including Hankook Cosmetics Manufacturing Co. and Korea Kolmar Holdings Co. Amorepacific is the nation’s largest cosmetics company and the producer of brands such as Etude and Mamonde. LG Household is South Korea’s second-biggest cosmetics firm. [Source: Seonjin Cha, Bloomberg, April 7, 2015]
The mid 2010s was a time of phenomenal growth and profits for the South Korean cosmetic industry. Seonjin Cha of Bloomberg wrote: “Led by Amorepacific Corp. and LG Household & Health Care Ltd., makers of Korean beauty products are surging more than 100 times faster than the broader market and prompting the nation’s male-dominated investment world to rethink how it covers the sector. The nation’s cosmetics sector is booming as the rising spending power of Asian consumers — particularly those from China — leads to an influx of tourists eager to mimic the look of Korea’s pop stars and on-screen celebrities. The industry’s rise is helping the US$1.4 trillion economy weather a downturn in manufacturing and shipbuilding industries that were once the nation’s biggest source of growth.
Nine cosmetic companies on the Kospi index, including Hankook Cosmetics Manufacturing Co. and Korea Kolmar Holdings Co., surged an average 311 percent in the past 12 months, compared with a 2.9 percent advance by the broader gauge. Earnings growth is fueling the rally. Amorepacific reported a 42 percent jump in 2014 net income, rising 158 percent in Seoul trading over the past year, making it the best performing stock in the beauty and personal care sector globally, data show. LG Household has advanced 75 percent. “When I called a ‘buy’ for Amorepacific years ago, some people laughed at me,” said Daishin’s Seo, who oversees more than US$4 billion in Seoul. “The stock jumped nearly 10-fold and look what happened to the old, traditional industries.”
“The growing importance of cosmetics companies is luring analysts from traditional sectors such as heavy industry, said Yang Ki In, the head of research at Shinhan Investment in Seoul. Chinese rivals “We have to readjust our research resources with the times,” Yang said by phone on April 2. “It used to be that analysts covering heavy industry were the most popular and well-paid. But those industries are now losing to Chinese rivals, and we’re seeing growth in other sectors like cosmetics that are actually benefiting from China.”
Shipbuilders, which former President Park Chung Hee promoted in the 1970s, were the worst-performing stocks on the Kospi last year as orders dwindled. Hyundai Heavy Industries Co., Korea’s fourth-largest company by market capitalization at its peak in April 2011, now ranks 24th after losing about US$30 billion in value. Amorepacific has leapfrogged to 12th place from 48th in 2011 and LG Household is 17th.
Fast Beauty Formula of Korean Cosmetics Companies
Reporting from Seoul, Joyce Lee of Reuters wrote: “At an Innisfree cosmetics store in Seoul's popular Myeongdong shopping district, a saleswoman helps 21-year-old Chinese tourist Yang Hui carry her shopping baskets to the pay desk in front of a large display showing K-Pop star Yoona. "There's a lot to choose from," said Yang, confessing to having bought more than she'd planned from the store's range of around 900 products. South Korea's top cosmetics company Amorepacific Group launches some 400 new Innisfree branded products a year, about half of which are no longer available a year later. [Source: Joyce Lee, Reuters, Aug 3, 2016]
“It's one of dozens of Korean mass cosmetics brands with a short product development cycle - a "fast beauty" approach that is increasingly popular among Chinese and other Asian millennials, gaining exposure in the United States and Europe, and attracting high-profile foreign investment. South Korea has become a hot-bed for applying to cosmetics the "fast fashion" principles of shifting designs quickly from catwalk to Main Street to capitalise on new trends. Thousands of small cosmetics firms compete to get their new products to market, with third-party manufacturers cutting the time on testing and recipe alignment and providing the capacity for swift market launch.
“Korean brands have cut product development cycles to as little as four months, compared to over a year for global brands, industry experts say. "When we received an eyeshadow order from a major global client in 2004, it took us two years to begin production. Now it takes us one year from the word go," said Lim Dae-gyu, a director at Cosmax Inc, a cosmetics manufacturer with annual sales of close to US$500 million. "For South Korean mass brands, it takes less - just 4-6 months from planning to market launch is average," Lim added. "New ingredients, new packaging, new formulas come on the market continuously, and when something does well Korean brands respond quickly," said Jang Jun-kee, managing director of the Korea Cosmetics Foundation, an industry group. Amorepacific's 2008 hit product, the cushion compact - a multifunctional sponge applicator for anything from liquid facial cover and sun protection to make-up base and moisturiser - inspired follow-up products from global brands such as L'Oreal's Lancome and Estee Lauder's Clinique.
“Innovative, often cute, packaging also helps. The Face Shop, a mass brand from South Korea's second-ranked cosmetics firm LG Household & Health Care, said last month it sold out of its initial 130,000 cushion compacts featuring Disney characters - costing 20,000 won (US$17.82) - in just two days. It said it expects to launch about 600 new products this year.
Beyond popularising beauty trends such as facial cosmetic products "BB cream" and "CC cream", South Korea has a reputation for innovation and for using natural and Oriental medicine ingredients from flowers and tea leaves to donkey milk, snail and seahorse to differentiate its so-called K-beauty products. "Korean consumers are very sophisticated. Their interest in beauty and expectations of cosmetics are high and they are willing to try new concepts," L'Oreal Korea said in emailed comments to Reuters. "It's a market where new trends emerge before potentially going global."
Customers and Researchers of South Korean Cosmetics
Reporting from Seoul, Seonjin Cha of Bloomberg wrote: “Seo Jae Hyeong says he’s started wearing skin foundation and facial masks at night. It’s not about looking younger, the 49-year-old head of Daishin Asset Management Co. says. Seo is trying to get first-hand insight into one of South Korea’s hottest stock-market bets: the cosmetics industry.
“Shinhan Investment Corp., part of the country’s largest financial group by market value, has deployed two analysts from its industrial team to focus on beauty research. The Korean unit of Daiwa Securities Co. hired a woman to initiate coverage of the industry last month, while Daishin Asset started a “female generation” fund in March in part to tap into growing prospects for the beauty sector. [Source: Seonjin Cha, Bloomberg, April 7, 2015]
“The number of Chinese tourists to Korea last year surged 42 percent to 6.1 million, according to the Korea Tourism Organization. More than 70 percent of the visitors’ shopping budget was spent on cosmetics in 2013, according to Iris Park, the analyst Daiwa hired to cover the sector. Korean television programs such as Get it Beauty, a makeup and skin care advice show that’s hosted on the Chinese online-video site Youku.com, help fuel demand for the nation’s products, according to Park. Korean brands are also “better attuned” to the particular demands of Asian consumers than global competitors such as L’Oreal SA, Park wrote, assigning a positive outlook for the industry.
“For Oh Sung Sik, chief investment officer for Korean equities at Franklin Templeton Investments in Seoul, cosmetic stocks look overheated. “Long lines at duty-free shops don’t justify the current price levels,” Oh said on April 1. “I see some herd instinct in the market.” Getting to grips with female beauty products may be a challenge for investors in a country with one of the largest divisions in gender equality. South Korea ranks 117th among 142 countries surveyed in the World Economic Forum’s annual 2014 Global Gender Gap Report, behind Qatar, India and Liberia. For Daishin’s Seo, the effort is worth it. “Understanding women and acknowledging their growing power is a key to success in investment now.”
AmorePacific, South Korea’s Innovative Cosmetics Giant
Amorepacific is South Korea’s and the world 14th largest cosmetic company. Under the leadership of the founder’s second son, Suh Kyung-Bae, which began in 1997, the company has boasts 30 brands in its portfolio and has revenues of around US$5 billion a year. President Suh Kyung-bae said: “I’m sure ‘Asian beauty’ will lead the global cosmetics trend in the 21st century,” arguing that the beauty paradigm is shifting from the West to Asia. “Amore Pacific aims to become an Asian company that reflects the pride of Asian people” and its products “will become a global luxury brand that represents Asian wisdom and beauty.”
Grace Chung wrote in Forbes: “South Korea’s beauty behemoth AmorePacific debuted at No. 28 on the 2015 FORBES’ annual list of the World’s Most Innovative Companies. Its luxury line is now housed in 66 upmarket U.S. department stores, including Bergdorf Goodman, Neiman Marcus, Bloomingdales and Nordstrom, while its premium brand Laneige is stocked in Target, the country’s second-largest discount retailer. With a market capitalization of nearly US$25 billion, shares of AmorePacific have surged more than 250 percent since the beginning of 2014. Revenues in 2014 jumped 20 percent from the previous year to US$4 billion. [Source: Grace Chung, Forbes, Aug 19, 2015]
“These figures have made Chairman Suh” one of South Korea’s richest citizens “and his company a favorite among investors, who cite AmorePacific’s innovations and booming Chinese business as some of the key drivers behind its success. One of its latest and most prized innovations commenced in January 2007, when AmorePacific began R&D for its cushion technology and aimed to tie skincare, sunscreen and liquid foundation into one formula, a Korean trifecta reminiscent of the hugely popular BB cream. After conducting more than 3,600 tests with 200 different sponges, in March 2008, the company introduced the cushion formula in the form of a compact. It soon changed the makeup habits of South Korean women, thanks to its portability, ease of application and quicker routine time. But it didn’t stop there.
“The cushion garnered global appeal, giving birth to 19 compacts across more than a dozen AmorePacific brands. Combined sales at home and abroad last year increased 105 percent, accounting for 26 million units — one sold every 1.2 seconds. A staggering 1,000 percent leap was reported for sales overseas. Cumulative sales reached 50 million units at the start of the year.
History of AmorePacific
Grace Chung wrote in Forbes: “It all started from a kitchen eight decades ago. Yun Dok-Jeong, an ambitious mother of six, began producing camellia oils as a hair treatment for stylish Korean women. Sourcing the best camellias from peddlers who would travel the Korean peninsula delivering goods, Yun would spend hours extracting the flowers’ oil and set up her first shop in the village of Gaesong, a city that is now part of North Korea. [Source: Grace Chung, Forbes, Aug 19, 2015]
“At a young age her second son Suh Sung-Whan learned the tricks of the trade, biking a round trip of 88 miles to collect bottles and labels and later concocting face creams beside his mother. Suh would then go on to take over the business in 1945, a vulnerable time in Korea’s turbulent history: World War II had just ended and with the subsequent demise of Japan’s colonial rule, the Korean War would soon rear its ugly head.
“Keeping his eye on the possibilities, Suh initially named the company “TaePyongyang,” which in English translates to the Pacific Ocean, a name that came from Suh’s early ambitions to take the company beyond the Pacific and create a strong foothold overseas.”
“A pioneer in its industry, in 1954, the company was the first beauty brand to establish a research lab, not long after the end of the Korean War, when the newly divided South Korea endured considerable economic suffering. Ten years later AmorePacific honed in on a sales technique and adopted a door-to-door sales system, employing women, many of whom lost their husbands in the war, to go from home to home, selling directly to consumers. Many of these “Amore Girls,” as they were called, would put their children through school and make ends meet with the commissions they made.
“Throughout the years the cosmetics outfit has stayed true to its roots with an ongoing focus on natural ingredients. In 1966, it became the first company to use ginseng — normally used in Asian traditional medicine — as a base for cosmetic products, and in 1979, the first in its industry to cultivate a tea garden, an initiative that would later help produce the world’s first skincare line based entirely on green tea. These early foundations have manifested into some of AmorePacific’s most popular brands, each distinct from the other: Sulwhasoo, its luxury line based on Asian medicinal herbs; Mamonde, a brand that explores the use of camellia, lotus and jasmine flowers; and Innisfree, the eco-friendly sister that derives most of its ingredients from the country’s beloved Jeju Island.
“It’s been 83 years since Suh’s grandmother toiled in her kitchen crushing camellia seeds, but her legacy lives on and Asian botanicals remain at the heart of AmorePacific’s innovation....The company “is now headed by Suh’s second son, Suh Kyung-Bae (his five other siblings showed little interest in inheriting the business).
Grace Chung wrote in Forbes: ““Formidable competitors want in. In January the world’s largest manufacturer of beauty products, L’oreal, released its own version of the technology through its subsidiary Lancome: the “Miracle Cushion.” Five months later, AmorePacific signed a memorandum of understanding with Parfum Christian Dior, giving the European luxury brand access to its cushion technology. [Source: Grace Chung, Forbes, Aug 19, 2015]
“But AmorePacific’s No. 1 market outside its home turf is none other than South Korea’s favored trading partner, China; though the country accounted for just under 10 percent of the company’s sales last year, its annual growth rate stood at nearly 40 percent. This year AmorePacific reported a 72 percent hike in net profit for the first quarter due largely in part to the demand of Chinese consumers. And while from May through June shares plunged by up to 10 percent due to the MERS outbreak that gripped the country and kept lucrative Chinese tourists away, the second quarter showed a 24 percent increase in sales and a 43 percent jump in net profit from the same time a year ago.
“What’s fueling the demand? Along with the rising purchasing power of its consumers, China, in recent years has developed a hearty appetite for the Hallyu Wave, a phenomenon of South Korean pop culture that has swept Asia since the early 2000s. Climbing exports of K-pop (popular music) and K-dramas have given way to new marketing strategies for companies seeking to capitalize on the craze. South Korea’s beauty industry in particular has been at the forefront of the trend, employing Hallyu celebrity endorsements and product placements in the country’s drama series.
“The marketing push pays off. When AmorePacific became the official sponsor of last year’s No. 1 K-drama “My Love from the Star,” for instance, it incorporated its skincare and cosmetic products throughout the 10-week series and almost immediately saw sales skyrocket. Skincare products used by the leading actress surged 75 percent while lipstick sales were up by a staggering 400 percent, again, thanks largely to China.
“But promotions only go so far. Aside from its advertising efforts, AmorePacific reinvests 3 percent of its revenue in R&D, where 500 researchers and chemists from around the globe try and test new ideas.
Lee Ji-yoon wrote in the Korea Herald: “Investment in dermatological studies has been the company’s policy priority for sustainable growth, said the company, which spends more than 3 percent of its sales revenue on research every year. In 1973, after years of experiments, the company succeeded in producing the world’s first cosmetic product using the active ingredients in ginseng, which was later developed to become Sulwhasoo in 1997 in cooperation with Kyung Hee University College of Oriental Medicine. Currently, the company’s study on herbal medicine covers all range of its beauty and hygiene products such as the No. 1 premium hair care brand Ryoe, which was launched 2008. [Source: Lee Ji-yoon, Korea Herald, July 27, 2011]
“The company has two research centers, the second of which opened in September last year as part of its efforts to boost creativity and diversity in its research activities. In order to complete the five-story building called “Mizium” at its R&D complex in Yongin, Gyeonggi Province, the company spent 50 billion won for five years. Under the company’s long-term plan to be listed within the global top 10 cosmetics brands by 2015, the new facility will play a key role to study the ever-changing needs of global consumers, the company said.
“Amore has also been active in collaborating with other research organizations to add expertise to their study of Asian people’s skin and how it ages. For 10 years since 1999, the company, in cooperation with Seoul National University Medical School, has studied Korean skin and its aging process. Considering the huge potential of the Chinese market, the company has also conducted a joint project along with university hospitals in China to develop products specialized for Chinese women and weather conditions there.
In April 2011, the company also signed a memorandum of understanding with Singapore’s Agency for Science Technology and Research to study a new generation of anti-aging products in the coming two years. Until the company launched the herbal medicine cosmetics brand in the late 1990s, many consumers here had no idea about the concept, while the local beauty market was dominated by Western brands.
Sulwhasoo is the most successful outcome of the company’s active research activities for decades. Over the years of study, Amore has earned 104 patents, including 54 international ones, and published 90 research papers, including 59 globally. In the field of ginseng study alone, the company has acquired a total of 32 patents since 1972. The company isolated specific ginsenosides that have antioxidant effects for the first time in the world. And the technology was selected among the nation’s 10 new technologies in 2009 and a driving force by the National Academy Engineering of Korea last year.
AmorePacific’s Ginseng and Chinese Herbal Medicine Beauty Products
Amore Pacific, Korea’s top beauty company, officially launched its high-end herbal medicine cosmetics brand Sulwhasoo in Beijing in June 2011.Lee Ji-yoon wrote in the Korea Herald: “Suh Sung-whan, founder and former president of Amore Pacific, spent his childhood in the 1930s in North Korea’s border city of Gaeseong, a home of quality ginseng. While helping his mother who sold camellia oil, which was used as hair essence by women, he learned about the effects of ginseng and other medicinal herbs grown here. His trust and affection for traditional Korean medicine gained during the period continued after his establishment of Amore Pacific in 1945 and led him to open a research center in 1954 for the first time as a local beauty company. [Source: Lee Ji-yoon, Korea Herald, July 27, 2011]
“ Suh, the founder, had strong belief in his products’ quality and ordered an aggressive marketing strategy, which included offering free samples to 300,000 consumers. And all the company got were positive reviews because the strength of Sulwhasoo was its safety to all skin types, the company said. Coupled with recent well-being lifestyle trend and new attention to oriental ideas, Sulwhasoo is now among Korea’s best-selling luxury skincare brands and unrivaled in the herbal-medicine-based cosmetics products. Yoonjoe Essence known as First Care Serum is one of the brand’s best sellers. Last year, about 1.6 million bottles were sold, the company estimated.
During the G20 summit held in Seoul in 2010, a set of Sulwhasoo cosmetics was also given to the wives of the visiting government heads as a special souvenir. Sulwhasoo is based on traditional Korean medicine helping the balance of mind, body and skin. The main ingredients are from ginseng, pine, plum blossom and camellia, which represent Korea’s tradition and sentiment,” said Kim Young-joon, manager of Korean medicine cosmetic research team at Amore’s R&D center. Some 30 herbs are carefully selected out of 20,000 species to be used for Sulwhasoo. In case of ginseng, three active ingredients are extracted and boiled for 18 hours.”
Korean Cosmetics in China
Joyce Lee of Reuters wrote: In 2015, South Korea year overtook the United States and Japan to become the No. 2 cosmetics exporter to China after France. It shipped US$1.1 billion worth of skincare creams, facial masks, compacts and other cosmetic products to the world's second-largest economy, according to the Ministry of Food and Drug Safety. South Korea's total cosmetics exports were worth US$2.59 billion, up 44 percent from 2014, with Hong Kong and the United States its second- and third-biggest markets, a long way behind China. Sales are boosted by South Korea's duty-free market - the world's biggest - which caters especially to big-spending Chinese tourists. Cosmetics accounted for nearly half of the country's record duty-free revenue of 5.8 trillion won (US$5.1 billion) in the first half of this year, customs data showed. “The trade is not without its downside. To counter unofficial re-sales, Korea's Customs Service is considering setting a 50 product limit for duty-free buyers, a customs official said. Analysts say this could dent sales by smaller firms, but note that bigger companies already limit duty-free purchases to control store inventory.”[Source: Joyce Lee, Reuters, Aug 3, 2016]
“For foreign investors, buying into the Korean success story is a convenient way also into China, where locals can't get enough of Korean TV dramas and K-Pop music. "We find beauty and media-entertainment sectors to be the most exciting (in Korea)," said Ravi Thakran, the chairman and managing partner at L Capital Asia, a unit of LVMH, which last month became a major shareholder in South Korean colour cosmetics brand CLIO. "The popularity of Korean culture such as K-Pop, dramas and celebrities boosted significant demand for Korean beauty products in China and other Southeast Asian countries," he added.
Beyond China, Korean cosmetics have also moved into chains including LVMH's Sephora, Target and Urban Outfitters, according to Korea's state-run trade agency KOTRA. The LVMH unit's investment in CLIO came just weeks after Goldman Sachs and Bain Capital Private Equity said they were buying a majority stake in unlisted cosmetics maker Carver Korea Co Ltd.
Peter Shadbolt of CNN wrote: “The cosmetics section of any department store anywhere in the world might usually be the first thing you encounter when you walk through the door, but in China it's often a mirror maze on a vast and dazzling scale. There are serried ranks of demonstrations as shop assistants jostle for attention armed with French moisturizers, South Korean all-in-one BB creams and Japanese lip glosses and violet eye shadows. If department stores in Asia are the battle ground for its emerging middle classes, then the cosmetics counter is its front line. [Source: Peter Shadbolt, for CNN, November 6, 2014]
“In China, cosmetics now outstrips groceries as the biggest selling item in its department stores, according to a report from Fung Business Intelligence Center. In 2013, Chinese women, and increasingly men, spent 162.5 billion yuan (US$26 billion) on cosmetics in an industry that showed 13.3 percent growth year-on-year, according to the same report citing figures from Euromonitor International. Japan's annual beauty and personal care market is still the largest in the region at about US$50 billion, second in the world only to the United States (which is about US$70 billion), according to Euromonitor International. But China's 150 million-strong middle class is closing the gap fast.
“For them, however, ground zero in terms of models of beauty is increasingly South Korea. While South Korea's domestic market is only a third the size of China, in terms of soft power the country punches well above its weight thanks to Asia's insatiable appetite for Korean drama series and their stars. China's middle class is expected to grow to 500 million within a decade. By 2030 around one billion people in China could be middle class — as much as 70 percent of its projected population, according to a report from EY. In terms of brands, according to Euromonitor, L'Oréal China continued to hold the leading position in the Chinese cosmetics market in 2013 with a value share of 34 percent.
K-Pop and K-Drama Stars Help Move Korean Beauty Products in China
Peter Shadbolt of CNN wrote: “Thanks to the popularity of K-pop and Korean soap operas — whose stars such as Song Hye-kyo and Kim Hyun-joong and Yoona of Girls' Generation are household names in the Asia-Pacific region — Korean beauty brands are now the hottest ticket item in China. One Korean brand in particular, Laneige (meaning the "the snow" in French) and made by South Korea's AmorePacific Corp, is popular among China's middle classes. With its blue and white design and French cachet, the skincare product benefits from the soft power of being South Korean and, more importantly, cheaper. [Source: Peter Shadbolt, for CNN, November 6, 2014]
Vivienne Rudd, director of global innovation at market researcher Mintel, said South Korean beauty and personal care retail market posted 5.8 percent growth year-on-year to 2013 compared with just 2.1 percent for the UK and 3.9 percent for the US. "The success of South Korean brands has a lot to do with Chinese consumers copying the style of South Korean soap opera and music stars," Rudd told CNN. "They'll even go so far as to get the particular products being used by these stars. The stores will try to get in the exact shades that South Korean actresses are using."
“Increasingly, South Korea is setting the standard for the growing market in skincare products, creating the all-in-one BB creams — which contain tints, moisturizer and even sunblock — that have become so popular in Asia. "South Korea is really the hot market for innovation and it's even overtaken markets like Japan as the place where everyone looks for the experts in skincare. The Chinese are fascinated by facial skincare and by face color cosmetics," Rudd said. "South Korean women are very much held up as the standard of beauty across Asia."
China Bans Imports of Korean Cosmetics To Retaliate Against Missiles
In 2017, China blocked some Korean cosmetics imports but analysts said it would have little affect the demand. By Yoon Ja-young wrote in the South China Morning Post: “China banned imports of 19 Korean cosmetics products amid rising tensions over Korea’s decision to allow the deployment of a U.S. Terminal High Altitude Area Defense (THAAD) battery here. According to Yonhap News Agency, Chinese authorities have recently refused to approve imports of 11 tonnes of cosmetics. Beijing announced that 28 cosmetics products failed to win approval for import, and among them 19 were Korean. It includes shampoo by CJ Lion, body wash products by Aekyung, lotion and other cosmetics by Iaso, and mask packs from by some mid-sized producers. The authorities cited diverse reasons such as changes in ingredients. [Source: By Yoon Ja-young, South China Morning Post, January 11, 2017]
“The rejection is regarded as part of economic retaliation by China, which includes bans on K-pop and K-drama stars and airliners’ chartered flights between the two countries ahead of the Lunar New Year holiday. Korea and the United States chose to install THAAD in South Korea amid increasing threats from North Korea, but China has been claiming that the system would threaten its security.
“Korean cosmetics, which are popular among Chinese consumers, were feared to be the next target. China’s state-run Global Times also issued threats over THAAD. “Department stores in Seoul may be popular among Chinese tourists, however, these tourists haven’t forgotten their identity. Chinese people have a clear mind about the situation on the Korean Peninsula and will not sacrifice the national interest for Korean cosmetics if Seoul chooses to side with the U.S,” it said in its Jan. 7 edition.
Cosmetics shares have been falling amid the increasing tension. AmorePacific’s stock has lost around 60 per cent in value since July 2016 when Korea and the United States announced plans to install the U.S. missile system. Kolmar Korea also fell to its lowest level in a year. “The issue of THAAD is likely to be overcome within a year. It isn’t very likely that Korean brands’ market share will fall in China’s cosmetics market due to it,” said Park Jong-dae, an analyst at Hana Financial Investment. “China’s import market is expanding rapidly as Chinese seek premium products, and Korean brands make up over 30 per cent. The retaliation is focusing on curtailing supply, and it isn’t likely to fundamentally affect demand,” he noted.
Bringing South Korea's Skincare Products to the U.S.
Golda Arthur, BBC News,“In a beauty salon in New York's Koreatown district, business partners Christine Chang, 34, and Sarah Lee, 35, are holding forth on the newest trends in skincare products from South Korea. Ms Lee holds up a poster of a frilly, white, translucent mushroom, explaining that the fungus is a new "ultra-hydrating" ingredient being used in skincare. She has the full attention of her audience, a select group of beauty editors diligently taking notes. Both Korean Americans, Ms Lee and Ms Chang first met 10 years ago, whilst working for global skincare giant L'Oreal in South Korea. [Source: Golda Arthur, BBC News, January 28, 2016]
“Back in 2014 they decided to use their dual knowledge of Korean skincare products and the U.S. to start their own company called Glow Recipe. Their business imports such items from South Korea, and its website sells 150 products. Their bestseller is a face mask made from kelp covered in a hydrating serum, which retails for US$14. Ms Lee and Ms Chang says the business has been growing at an average 70 percent ever quarter since they launched.
“The popularity of Korean beauty products in the U.S. can be traced back to 2011 when, the then unknown product, "BB cream" first launched in the country. In 2014 the U.S. market for BB cream alone was worth US$164 million. "South Korea's beauty industry has seen phenomenal growth," says Sarah Jindal, analyst for market research firm Mintel. Bridging this beauty gap is where people like Korean American Charlotte Cho come in. Ms Cho runs the online beauty blog and shop Soko Glam with her husband, and also recently launched a book about Korean beauty secrets.
A native of California who moved to New York, Ms Cho, 30, says: "We helped drive this growth in 2012 [of the sale of Korean beauty products], when we started the company. "At the time, I felt like there was a huge gap between US and Korea. There was a cult following, but no proper bridge between the two."
The blog and the book help explain and spread the Korean "beauty philosophy", and Ms Cho is a proponent of the 10-step routine. She says SoKo Glam is growing "exponentially" in its third year Megan McIntyre, beauty director at lifestyle website refinery29.com, says that most American women who try the 10 steps can't keep it up. "After a while, many women who tried to keep up realised that it was pretty damn expensive to use ten plus products a day, and there wasn't necessarily a huge, noticeable difference in their skin," she says. "So instead they cherry picked the products that were best for their skin. An essence here, an ampoule there, an under-eye mask for emergencies. "It became less about emulating the entire routine and more about finding something new to boost an existing routine."
But the dilemma for Western consumers remains - where to begin with this plethora of products? Alicia Yoon, who runs New York-based Peach and Lily, an online store selling imported Korean beauty products, says it is important that firms like hers don't sell too many items. "Our curation process is so rigorous that only 5 percent of the products we look at really make our cut," she explains. From thousands of South Korean brands, she picked out about 50, and then visited their companies to look closely at their research and development process. Ms Yoon, 33, who quit her job in private equity to start her company in 2012 says she hasn't looked back since.
Image Sources: Wikimedia Commons.
Text Sources: South Korean government websites, Korea Tourism Organization, Cultural Heritage Administration, Republic of Korea, UNESCO, Wikipedia, Library of Congress, CIA World Factbook, World Bank, Lonely Planet guides, New York Times, Washington Post, Los Angeles Times, National Geographic, Smithsonian magazine, The New Yorker, “Culture and Customs of Korea” by Donald N. Clark, Chunghee Sarah Soh in “Countries and Their Cultures”, “Columbia Encyclopedia”, Korea Times, Korea Herald, The Hankyoreh, JoongAng Daily, Radio Free Asia, Bloomberg, Reuters, Associated Press, BBC, AFP, The Atlantic, The Guardian, Yomiuri Shimbun and various books and other publications.
Updated in July 2021