Ease of regulations can help startups succeed

Ease of regulations can help startups succeed. May. 05, 2018 07:55. .
Global cosmetics giant L’Oreal acquired 100 percent stake in Nanda Corporation, which runs domestic fashion retailer Stylenanda and cosmetics brand Three Concept Eyes (3CE). It is the first time that the French cosmetic giant bought out Korean cosmetics brand. The sale price is estimated at 570 billion to 600 billion won. It appears that L’Oreal recognized Nanda’s company value and its high competitiveness in the Chinese market as it is eyeing for the Chinese cosmetics market.

Stylenanda is one of the first-generation fashion startups in Korea. Stylenanda CEO Kim So-hee started her business at the age of 22 in 2005, buying clothes from the Dongdaemun Market and selling them online. Her unique fashion style soon won the hearts of many customers in their 20s.

Based on a strong brand recognition achieved from her fashion business, she launched cosmetics brand 3CE in 2009, establishing the foundation for her huge success. 3CE partnered with domestic cosmetics manufacturer Cosmax without having its own production facilities. 3CE has been seeing rapid growth with 69 percent of Nanda’s revenue (164.1 billion won) coming from the cosmetics business last year. It entered into the Chinese market in 2010 with the help of Hallyu boom in the country. In 2017, it ranked first in the brand recognition in color cosmetics category, writing another history in China. This is why L’Oreal picked Nanda Corporation to break into the Chinese market.

A multinational consumer goods company Unilever, ahead of L’Oreal in 2017, acquired a Korean cosmetics company to enter into the Chinese market, demonstrating an increasing interest in K-beauty in the global market. The government’s easing of regulations also played a pivotal role in this development. Entry barriers of cosmetics business have been lowered as the law on cosmetics manufacturing was changed from the permit system to report system in 2000. As a result, small and medium sized cosmetics brands have entered into the market, increasing the competitiveness of Korean cosmetics brands and creating a momentum for entry into the overseas markets. I expect to hear more success stories of startups, following the example of Nanda, which started as a small online retailer and turned into a powerful cosmetics brand in 13 years.