K-beauty products struggle to stay alive

The Korea Times

The Korea Times

Business

Mon, December 4, 2023 | 15:18

Companies

K-beauty products struggle to stay alive

Posted : 2017-03-29 13:25

Updated : 2017-03-30 11:06

By Kim Ji-soo

The Korean cosmetics trend in China seems to be cooling down amid the conflict between Seoul and Beijing over the former's deployment of a Terminal High Altitude Area Defense (THAAD) battery, which the latter considers a threat to its security. But Korean cosmetics companies will not be deterred. Many are diversifying and strengthening their export and niche markets.

The Korean "cosmeceutical" industry is still small, estimated at 500-billion-won by some reports. However, it has significant growth potential, as "K-beauty" brands are thriving globally and customers around the world continue to embrace Korean cosmeceuticals. Cosmeceutical is more of a marketing word, a combination of cosmetics and pharmaceuticals, which contains ingredients that may have medicinal or alleviating effects of skin symptoms.

Leading cosmeceutical brand It'S SKIN, for instance, has opened stores in the South American country of Ecuador. Owing to brand recognition, the company's Prestige Creme D'escargot, which won atop cosmetics award for three years straight for 2014, 2015 and 2016, has seen a significant sales increase.

The opening of its stores — two in the capital Quito including one in Inaquito, a district within Quito that is part of the company's global strategy, its PR firm said.

"Female consumers in Central and South America are very interested in basic skincare products to protect and preserve their skin against the hot sun," a company official said. While cosmeceuticals may seem largely a buzzword to the uninitiated, the Korean industry comprises not only of cosmetics companies but also pharmaceutical companies, dermatology clinics and bio companies,and is boldly entering overseas markets. And It'S SKIN entry into the Latin American market defies the general concern that K-beauty products have rallied mostly from their success in the Chinese market.

Other leading K-beauty firms are branching out to other markets. More than 160 K-beauty firms, including large ones such as Cosmax, Hanbul Cosmetics and Style Nanda attended the Cosmoprof Worldwide Bologna from March 16 to 20, gaining significant interest from customers overseas.

Mediheal, a top Korean beauty brand known for its facial masks and strong sales in China, said it has established manufacturing facilities and distribution channels in countries other than China, such as Japan, where it opened a production facility late this month, and Cambodia, where it opened a store.

Leo Choi, director of the marketing communication team for Mediheal, said the company will be able to sell its products in Europe, particularly in Spain, Italy and Britain in April. It has said it plans to enter the Latin American market as well but no date has been set for that region yet.

Kolmar, one of the top global original design manufacturers, established a foothold in Canada last year, after previously doing so in the United States. And with these footholds, the company hopes to achieve 1 trillion won in sales by 2018. Meanwhile, Cosmax acquired a factory in Solon, Ohio, in the United States in 2013.

Last year, TonyMoly products made news by becoming sold in Sephora stores in Europe. Because of its expansion into other overseas markets, the company is not seeing a backlash from China's THAAD retaliation. "But we have also obtained the necessary permits for our products in other countries including China," an official at TonyMoly said. Products of Nature Republic, which advanced into the U.S. market in 2012, are now sold at four shopping malls and the company's own 17 stores there.

One industry watcher said the effects on the Korean cosmetics industry of China's opposition to South Korea's deployment of the THAAD battery may become clear once the March figures are in. "So far, the February figures in terms of exports to China and the number of Chinese visitors to Korea are okay, so the March figures are the ones to watch for," she said. Other analysts, however, said a more long-term view is required to gauge any possible negative effects, and point to the need to see what the first half figures look like. But considering all constraints, it is safer to say a post-China strategy is the answer.

Companies that have planned ahead by pioneering expansion into other markets, such as Cosmax, and by obtaining patents seem less concerned about the overall gloomy outlook on the industry. Indeed, some analysts believe it will be cosmetics sales at duty free stores, not sales at retail or flagship stores, that may well be hit by China's retaliatory measures, including its ban, starting this month, on group tours to Korea.

janee@koreatimes.co.kr

janee@ktimes.com