On December 25, the South Korean Trade Association released a surprising number: In the first eight months of 2023, Chinese cosmetics exports to South Korea surged 190 percent.
Could it be that a country so deeply influenced by the K-wave and K-beauty for over the past decade, is starting to reverse the trend?
In 2015, South Korea surpassed the US and Japan to become the second largest exporter of cosmetics to China (France was first largest). The same year, South Korea's cosmetics exports to China increased tenfold compared with 2011, from $70 million (500 million RMB) to $700 million (5 billion RMB).
The exports surge was propelled by the appeal of cost-effective homegrown cosmetics and the rise of Chinese cross-border e-commerce platforms.
Chinese beauty product exports increased more than 10 times in 2020. Among them, cutting-edge brands like Perfect Diary, Florasis, Judydoll, and Colorkey have started venturing overseas, to places like Japan, South Korea, and Southeast Asia.
However, significant challenges to further expansion remain.
“C-beauty labels had to overcome perceptions of inferior quality, which can hinder brand trust and loyalty,” says Amber Wu, senior China marketing consultant with over a decade of experience in the industry.
“General skincare, hair care, and personal care are challenging [categories] as the result of products taking longer to realize, and consumer habits vary globally. Instead, Chinese color cosmetics fall under FMCG (fast-moving consumer goods),” says Lin Lin, CEO of China International Beauty Expo.
Brands’ current marketing strategy, which relies on influencer campaigns, has secured them success.
On January 20 last year, Winona, a C-beauty brand focusing on sensitive skin solutions, partnered with Crash Landing on You actors Hyun Bin and Son Ye-jin to hold a product launch conference in South Korea.
Chinese make-up brand Perfect Diary promotes its brand through celebrity endorsements and marketing via film and television productions in the Korean peninsula.
As cosmetics center on aesthetics and values, the category is more susceptible to the influence of national culture than other consumer goods segments.
However, Wu warns that the KOL marketing strategy might be effective only in the short term, and may not establish the foundation needed to foster enduring brand equity.
“The rise of digital platforms has made it easier for Chinese brands to reach South Korean consumers,” says Wu.
The popularity of cross-border e-commerce is opening up a new path for C-beauty to go overseas. Japanese and South Korean consumers are increasingly happy to buy cosmetics on AliExpress, Shein, and Temu. Vast arrays of options and cheap prices are the main draws.
"Talking to my colleagues in Korea, their overall consensus is that the success of C-beauty brands stem from the power of TikTok and related fun contents marketing. Fresh and new brand and product image. And, relatively affordable price positioning," shares Hwee Chung, Beauty Director at Worldpanel by Kantar.
“Apart from Korea, Chinese color cosmetics exports to Japan, a country where consumer perceptions of Chinese brands are less enthusiastic, rose 45 percent in 2023,” says Lin Lin.
In the US, newcomer Temu (owned by Chinese e-tailer giant Pinduoduo) has broken into the top 10 for online beauty sales, accounting for 10.6 percent of the market, according to Insider Intelligence. Meanwhile, Shein’s daily beauty product sales came in at over 1 million items. The category’s growth hints at the direction of travel. Currently, Chinese brands such as Joocyee, Judydoll, and Colorrose rank high in terms of cosmetics category searches.
Data released by the South Korea’s Statistics Bureau in August last year showed that cross-border e-commerce transaction volume in South Korea increased 25.6 percent in the second quarter of 2023, setting a new post-2014 record.
“I believe Chinese manufacturing quality and turnover capacity are world-leading for the color-cosmetic sector, especially in the eye-color category,” says Lin Lin.
“While online channels are crucial, establishing a physical presence through stores or pop-up events can enhance brand visibility and credibility,” says Wu.
South Korean consumers tend to experience the effects of cosmetics in person, so they are more willing to purchase offline. Olive Yong, South Korea’s largest beauty store, has grown its offline beauty market share to over 90 percent.
South Korean consumers also prefer brands that adhere to sustainability principles. In 2023, Olive Yong conducted a survey of 2,000 South Korean women. Close to 94 percent of respondents said that when choosing between similarly priced products, they would pick products that contribute to society and the environment.
Chinese brands need to respond to these preferences when they enter the South Korean market. But these up-and-coming Chinese labels have yet to incorporate this vision into their operations.
“After experiencing rapid growth, a notable challenge for C-beauty brands lies in sustaining their performance and identifying a second growth curve to secure a robust market position. These brands must explore new avenues for future growth, focusing on areas such as R&D, effective communication of brand values, and premiumization,” says Wu.