Cosmetics makers advance to global markets on 'K-beauty' boom - The Korea Times
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Cosmetics makers advance to global markets on 'K-beauty' boom

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By Choi Sung-jin

Riding on the "hallyu" fervor and consequent "K-beauty" boom, the domestic cosmetics industry has emerged as a promising export sector.

Spearheaded by the two front-runners ― Amore Pacific and LG Household & Health Care ― Kolmar Korea and Cosmax are surfacing as major manufacturers followed by smaller but promising firms, industry watchers say.

One such firm rapidly following the top companies is Claires Korea, which started its operations of its new manufacturing plant in Gimpo, west of Seoul, last month.

Established in 2011, the company made sensations with just one hit item, "Guerisson 9 Complex Cream" in the Chinese market, recording 180 billion won ($160 million) in sales last year. The "horse oil cream," first released in 2014, is based on German horse oil known to be effective in healing wounds and the company has sold more than 30 million products in China by just word of mouth.

Encouraged by the popularity of the horse oil cream, Claires Korea has set up a subsidiary, Cos Nine, and seeks to emerge as a major original equipment manufacturer (OEM) ― a company that makes a part or subsystem that is used in another company's end product, and plans to go further to be an original design manufacturer (ODM) ― a firm that designs and manufactures a product as specified and eventually rebranded by another firm for sale.

"Our goal is to become one of the ‘big-three' cosmetics makers by 2020, sharing the market with the two existing manufacturers of Kolmar Korea and Cosmax," said Kim Hyung-tae, CEO of Cos Nine.

As the domestic cosmetics consumer market grew riding on the K-beauty boom, its manufacturing market has also expanded.

The number of cosmetics sellers in Korea, as registered with the Ministry of Food and Drug Safety, stood at 3,840 last year, recording a hefty 6.5-times increase from 591 in 2010. The figure includes not only manufacturers-marketers, such as Amore Pacific and LG Household & Health Care, but also OEMs and ODMs, including Cosmax and Kolmar Korea.

Industry watchers estimate the market for original equipment manufacturing and original design manufacturing to be from 1 trillion won to 1.5 trillion won annually.

Shinsegae International, a clothes maker affiliated with Shinsegae Department Store, has also jumped into the cosmetics manufacturing market, by setting up Shinsegae Intercos Korea, a 50-50 joint venture company with Italy's Intercos, last December.

Shinsegae International's objective of making fashion and cosmetics as its two major pillars for growth, and Intercos's strategy of targeting Asian markets using Korea as a stepping stone, have matched up with each other, the industry watchers said. Shinsegae International is building a large cosmetics plant and research and development center in Osan, Gyeonggi Province, and will start operations at the complex as early as this December with the goal of attaining yearly sales of 100 billion won by 2020.

Tony Moly, a major cosmetics brand here focusing on road shops, is also building a 59,400-square meter plant in Zhejiang Province, China, to be completed by next March. The company plans to serve as OEM and ODM for eight Chinese cosmetics companies.

Korea's cosmetics industry is moving from a trend-setter to a manufacturing center by winning global recognition for its technological and production capacities, they said.

"For instance, Amore Pacific's latest hit product, Cushion Foundation compact, has become a ‘must item' among global cosmetics brands," said an industry executive. "That and other hit products have reaffirmed Korea is a market to watch, which continues to lead global market trends."



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