Korean cosmetic brands, which have been heavily reliant on the Chinese market, are shifting their focus to the United States and Japan to strengthen their global presence.
The new strategy follows the rising popularity of Korean culture globally, leading to rising demand for Korean beauty products in the United States and Japan. The importance of the Chinese market, meanwhile, has fallen steadily since the implementation of the U.S.-led Thaad anti-missile system in 2017 led to an informal boycott of Korean products, with the recent lockdowns as part of Beijing's Zero-Covid policy further hitting sales.
Amorepacific’s sales in the United States increased by 60 percent in the first quarter on-year, according to the company on Thursday.
With all Amorepacific brands showing growth in sales, sales of Laneige and Sulwhasoo products helped raise earnings in the United States.
In particular, Sulwhasoo sales and profits were brought from both online and offline channels. The brand focused on expanding sales of its products at offline one-stop beauty shops such as Sephora, while launching the brand on Amazon in April to expand its online presence.
The Laneige brand strengthened its presence in the U.S. market by focusing on lip products.
Lip products made up 50 percent of the brand’s total sales in the United States and have reached over 25 percent of sales growth on average for the past three years. The brand also showed a strong presence online, with consistent sales growth of over 20 percent a month in the first quarter. It also made it to the top five list for the most searched brands in the skincare category.
Industry insiders say now is the perfect time for cosmetics companies to target the U.S. market, as Korea’s presence in the global market has been expanding with the recent success of BTS and “Squid Game.”
“The [U.S.’s] view on Asia, especially Korea, has changed,” said a spokesperson for Amorepacific.
According to Euromonitor, the United States has the largest cosmetics market, at $91.8 billion, followed by China and Japan.
LG Household & Healthcare (LG H&H), a major local consumer goods company, also announced plans to expand and strengthen its position in the U.S. beauty market last January. The company mentioned two other goals earlier in the year, including expanding international businesses centered on the U.S. market and boosting digital marketing strategies.
In January, LG H&H unveiled its mini tattoo printer, set to be launched in the fourth quarter of this year in the United States. The printer will allow users to create a temporary tattoo of any image they want and print it using a vegan ink cartridge developed by the company.
LG H&H has also expanded its U.S. business by acquiring a 65 percent market share of The Creme Shop, a Los Angeles-based beauty brand, for $120 million in April.
The Creme Shop is known for its whimsical and vibrant skin care, make-up and beauty accessories that appeal to a diverse group of consumers, said the company.
The brand can be found at retail shops such as Ulta Beauty and has also successfully appealed to younger consumers by launching collaborative projects with Hello Kitty and Disney.
Cosmetics manufacturers such as Kolmar Korea are also diversifying their strategies aimed at the U.S. market.
Kolmar Korea acquired the global trademark rights to the Kolmar brand from the original company headquartered in the United States in May. The company is in the process of constructing an operations center in New Jersey.
The center will serve as the business hub to effectively respond to changes in U.S. regulation and market trends, and the company will work with Process Technologies & Packaging (PTP), a U.S.-based cosmetics manufacturer acquired by Kolmar Korea in 2016.
Japan is another market that domestic cosmetics companies are targeting.
Local cosmetics manufacturer Cosmax established an office in Japan in January and plans to construct a factory near Tokyo, according to the company.
The construction of the factory will begin in the first half of 2023 and it will be in operation starting in 2025.
“There are many Korean cosmetics brands looking to enter the Japanese market as the demand for Korean beauty products surges due to the resurgence of Hallyu [the Korean Wave] in Japan,” said the spokesperson for Cosmax.
“We can help these brands to enter the Japanese market through our office in Japan and also help Japanese brands to sell their products in Korea in reverse.”
In fact, small and mid-sized local cosmetics companies are already showing good results in Japan. Beauty products such as eyelash serum, mascara and lip tints from rom&nd, a Korean beauty brand, have topped the chart within the Lips app, a popular online makeup review app in Japan. Lip tint products from Amuse, a Korean vegan beauty brand, are also top-selling items on Japanese e-commerce marketplaces such as q10 and Rakuten.
Industry insiders say targeting other countries instead of China, which has always been Korea’s largest export destination for cosmetics, is necessary because of the instability of the Chinese market. According to the Korea Customs Service, China was still the largest importer of Korean cosmetics last year, at $4.1 billion, 53 percent of the total $7.6 billion.
“The Chinese market is still big for cosmetics, but new strategies are definitely needed since many Chinese beauty products have been developed over the years and there is a tendency for Chinese consumers to purchase local brands,” said Kim Joo-deok, a professor at Sungshin Women’s University Graduate School.
“The cosmetics industry is heavily influenced by the country’s local brands and culture, so the Korean Wave in the United States and Japan will be a big opportunity for domestic cosmetics companies.”