By Jenna Gibson
Amid plunging exports, Korean cosmetics brands are defying the odds. According to new numbers released by the Korea Chamber of Commerce and Industry, exports of beauty products are up 53 percent in the first nine months of 2015 even though exports as a whole are down an average of 6.6 percent.
“Experts say the business strategy of product differentiation was the key to success,” writes the Korea Joongang Daily. “Korean cosmetics makers have mainly been focusing their export business on facial makeup and skincare products – such as Cushion foundation, BB cream and facial mask packs – instead of color cosmetics products, where European companies are dominant in the global market.”
Cosmetics giant AmorePacific is leading the pack. The company’s revenue jumped 20 percent in 2014, making it the world’s 14th largest cosmetics company. Meanwhile, Forbes listed AmorePacific at No. 28 on its annual list of the World’s Most Innovative Companies. Investors cited “AmorePacific’s innovations and booming Chinese business as some of the key drivers behind its success.”
But K-Beauty has gone far beyond China. After opening its first European store in Berlin this February, cosmetics store Missha opened three flagship stores in Spain last month. According to the Korea Trade-Investment Promotion Agency (KOTRA), Spanish imports of Korean cosmetics have skyrocketed from 250,000 euros in 2010 to 2.61 million euros in 2014.
K-Beauty and Hallyu
Fans of Hallyu know that many of Korea’s cosmetics companies rely heavily on celebrity endorsements – many stores in Seoul’s shopping district of Myeongdong plaster gigantic posters of the hottest actors and K-pop groups across their walls, and fans can earn special merchandise featuring their favorite celebrity for spending a certain amount of money.
In fact, a recent survey of foreigners in Myeongdong and Apgujeong shopping areas found more than two thirds of them said they became interested in Korean cosmetics products after “getting to know Korean dramas or K-pop stars.” According to the study’s author, a professor at Hanyang University, “Interest and affection for Korean culture, or hallyu, has a direct correlation to growth in the cosmetics industry.”
Visit Seoul, the official travel guide for the city, is capitalizing on this trend –cosmetics are second on the site’s list of Top 10 Items to Buy in Seoul. As part of the Hallyu section of their website they have a recommended “Hallyu Star Beauty Course,” that introduces a hair and nail salon as well as clothing stores that are frequented by popular Korean celebrities. Clearly, Seoul knows its audience.
And across the Pacific, this year the United States’ Hallyu mecca, KCon, featured workshops including “Korean Celebrity Skincare Secrets,” and “K-Pop Idol Makeover” as well as booths from many of Korea’s top brands, hoping to capitalize on Hallyu fans’ interest in all things Korea.
Breaking into the American Market
Despite their success at Kcon, many of the big Hallyu trends that have caught on in Asia, the Middle East, and South America have been unable to break into the mainstream in the United States. K-pop acts like the Wondergirls and BoA have tried to break into the American music market to no avail, and while Dramafever has more viewers than ever, we’re never going to see My Love from the Star on during primetime.
K-Beauty, however, may have managed to break out of niche popularity. Sephora, a Paris-based cosmetics retailer with stores across the United States, began carrying Korean cosmetics brand Dr. Jart in 2011 and has since stepped up its offerings. Sephora’s American website has an entire section dedicated to K-Beauty, urging customers to “Get the latest from Korea: the coveted dewy look.”
Perhaps more telling, this year Amazon added a Korean Beauty subcategory within its beauty department, giving American consumers access to all their favorite cleansers, foundations and lotions without the international shipping costs. Even Target has hopped on the bandwagon, adding AmorePacific’s Laneige line to its premium skincare product aisle in 2014. Clearly K-Beauty is on the rise in the United States.
Jenna Gibson is the Associate Director for Communication Technology and Programs at the Korea Economic Institute of America. The views expressed here are the author’s alone.