China holds 'K-beauty' in check

Korean actresses Lee Young-ae, Song Hye-gyo and Jeon Ji-hyun are called the “goddesses of the Korean Wave” in China. After gaining popularity from Korean dramas, they have worked as a model for Korean cosmetics brands (or K-beauty), contributing to their popularity. Hwang Jeong-eum, Lee Ha-nui, Song Ji-hyo and Kim Go-eun have also become K-beauty celebrities. Korean actresses’ white and clean skin is admired by many Chinese women. Korean cosmetics brands, which used them as their model, have also become popular.

Everybody wanted France’s Chanel and Japan’s Shiseido until the 1990s. The products of such brands were perceived by Korean women as the best gift from their relatives returning from overseas trips. Back then, Korean cosmetics was almost unknown in the world. Now, Korean cosmetics brands are highly popular not only in the greater China including mainland China, Taiwan and Hong Kong and Southeast Asia but also in Europe and the U.S. Despite the global economic downturn, the export of Korean cosmetics increased 52.5 percent to 2.9 billion U.S. dollars year-on-year last year. The growth was particularly notable in China with a 99.2 percent hike.

Amore Pacific, the first Korean cosmetics brand targeting the Chinese market, recorded a revenue of 5.5 trillion won (4.52 billion dollars) last year, largely contributed by Seolhwasu, a premium product using Korean traditional herb that surpassed the annual sales of one trillion won (822,000 dollars) at home and abroad. Amore Pacific has smaller presence than P&G or L’Oreal in China, but surpassed Japanese brands such as Shiseido and SK-II. LG Household & Health Care also had a revenue of 2.4 trillion won (1.97 million dollars) only in its cosmetics segment based on the premium brand of “Hu.”

As China tries to strongly regulate imported cosmetics, Korean cosmetics companies are nervous about it. The Chinese government changed ordinances on cosmetics in June last year to reclassify whitening cosmetics products, in which Korea is competitive, as “special cosmetics” that require 11 months for approval. In addition, it is trying to take the same action for anti-aging skin care products. Although it claims the actions are taken to protect its own industry, it seems to target Korean brands. The Korean government and Korean companies need to pull wisdom and power to prevent K-beauty, a new driver behind Korea’s exports, from being affected by China’s non-tariff barrier to imported goods.