What happened
In the first quarter of 2024, South Korea’s Customs Department revealed that the country’s cosmetics exports increased 21.7 percent year on year, reaching $2.3 billion (16.6 billion RMB), a new high.
In 2021, overseas sales of South Korean cosmetics reached a peak of $9.22 billion (66.5 billion RMB), before dropping to $7.98 billion (57.7 billion RMB) the following year. Exports only rebounded to $8.49 billion last year.
In the first quarter of this year, China emerged as the top destination for South Korean cosmetics exports, with sales totaling $610 million (4.4 billion RMB), approximately 26.5 percent of the total export volume. The US followed closely behind with exports of $380 million (2.7 billion RMB), then came Japan with $240 million (1.7 billion RMB), and Vietnam with $150 million (1 billion RMB).
The Jing Take
Although China remains South Korea’s largest export market for cosmetics, its market share has consistently declined over the past few years.
In the first quarter of 2021, China accounted for 53 percent of South Korea’s cosmetics exports share, but this figure dropped to 32.7 percent in the same period in 2022, and further decreased to 26.6 percent this year.
Meanwhile, the US is a top-three importer of South Korean cosmetics, followed by France and Canada. In 2022, South Korea surpassed France to become Japan’s largest source of imported cosmetics.
Over the past few years, K-beauty brands have shifted their focus from China to the global market. Many Chinese may not even have heard of the South Korean skincare and makeup labels that are currently popular in Europe and the US as most products are produced by small and medium-sized beauty companies, such as COSRX, Glow Recipe, and Saturday Skin.
For instance, Gen Z fav Glow Recipe went viral on TikTok and Sephora in North America. Its sales in 2023 amounted to $300 million (2.2 billion RMB). Then there’s COSRX’ snail cream, which sparked the snail protein skin care trend in the US.
The change in strategic direction is also reflected in the numbers. South Korea’s cosmetics exports to the US increased 79.1 percent YoY in 2022, while exports to China fell 19.9 percent during the same period.
In the third quarter of 2023, the US became the largest importer of cosmetics from South Korean small and medium-sized enterprises, surpassing China for the first time.
But how did K-beauty succeed in the West? The first big move towards globalization was a comprehensive rebranding, redesigning the packaging and product concept closer to the English-speaking world.
Amorepacific’s natural South Korean skincare brand Innisfree carried out a comprehensive rebranding, updating its logo, colors, packaging and promotional language, adding popular keywords in the West, such as efficacy, diversity, purity, and cruelty-free.
In late 2022, Sulwhasoo announced K-pop idol Rosé (Roseanne Park) of Blackpink, who enjoys worldwide fame, as its brand ambassador. While maintaining its Korean identity, the brand looked for a personality who had a big global following. Moreover, the brand removed Chinese characters from the packaging, making it English-friendly.
Another key step was stocking products at beauty multi-brand retailers, like Sephora, Ulta and online on Amazon, and proprietary official websites. Operating a flagship store in prestigious shopping locations is costly, and not that efficacious.
For new brands, appearing on Sephora’s counter means visibility as it is an important offline touchpoint in the West. These retailers have built strong reputations and consumers are used to shopping and discovering new products there.
Lastly, South Korean influencers and netizens have become important promoters of K-beauty. Their content on YouTube, Instagram, and TikTok provides shoppers with better access to information on South Korean makeup and skincare, such as application methods, and inspiration.
Overall, K-beauty’s global expansion provides a great playbook for Chinese labels that wish to venture overseas. Though C-beauty brands need to differentiate their proposition, South Korean brands point the way on issues like retail distribution and promotional keywords that Chinese businesses should take into account.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.