The draw of fast K-beauty

Korean cosmetics brands take as little as four months to launch new products, flooding the market with hundreds of new products a year

Korean cosmetics brands have cut product development cycles to as little as four months, compared to more than a year for global brands, industry experts say.
Korean cosmetics brands have cut product development cycles to as little as four months, compared to more than a year for global brands, industry experts say. PHOTO: REUTERS

SEOUL • At an Innisfree cosmetics store in Seoul's popular Myeongdong shopping district, a saleswoman helps 21-year-old Chinese tourist Yang Hui carry her shopping baskets to the pay desk in front of a large display showing K-pop star Yoona. "There's a lot to choose from," said Ms Yang, confessing to having bought more than she had planned from the store's range of around 900 products.

South Korea's top cosmetics company Amorepacific Group launches about 400 new Innisfree branded products a year, about half of which would no longer be available a year later.

It is one of dozens of Korean mass cosmetics brands with a short product development cycle - a "fast beauty" approach that is increasingly popular among Chinese and other Asian millennials, gaining exposure in the United States and Europe and attracting high-profile foreign investment.

South Korea has become a hotbed for applying to cosmetics the "fast fashion" principles of shifting designs quickly from catwalk to Main Street to capitalise on new trends.

Thousands of small cosmetics firms compete to get their new products to market, with third-party manufacturers cutting the time on testing and recipe alignment and providing the capacity for swift market launch.

Korean brands have cut product development cycles to as little as four months, compared to more than a year for global brands, industry experts say.

Mr Lim Dae Gyu, a director at Cosmax Inc, a cosmetics manufacturer with annual sales of close to US$500 million (S$670 million), said: "For South Korean mass brands, it takes just four to six months from planning to market launch."

South Korea last year overtook the US and Japan to become the No. 2 cosmetics exporter to China after France. It shipped US$1.1 billion worth of skincare creams, facial masks, compacts and other cosmetic products to the world's second-largest economy, according to the Ministry of Food and Drug Safety.

South Korea's total cosmetics exports were worth US$2.59 billion, up 44 per cent from 2014, with Hong Kong and the US its second- and third-biggest markets, a long way behind China.

Sales are boosted by South Korea's duty-free market - the world's biggest - which caters especially to big-spending Chinese tourists. Cosmetics accounted for nearly half of the country's record duty-free revenue of 5.8 trillion won (S$7.1 billion) in the first half of this year, customs data showed.

The trade is not without its downside. To counter unofficial re-sales, South Korea's Customs Service is considering setting a 50-product limit for duty-free buyers, a customs official said.

Analysts say this could dent sales by smaller firms, but note that bigger companies already limit duty-free purchases to control store inventory.

Amorepacific's 2008 hit product, the cushion compact - a multifunctional sponge applicator for anything from liquid facial cover and sun protection to make-up base and moisturiser - inspired follow-up products from global brands such as L'Oreal's Lancome and Estee Lauder's Clinique.

Innovative, often cute, packaging also helps.

The Face Shop, a mass brand from South Korea's second-ranked cosmetics firm LG Household & Health Care, said last month its initial 130,000 cushion compacts featuring Disney characters - costing 20,000 won - sold out in just two days. It said it expects to launch about 600 new products this year.

Beyond popularising beauty trends such as facial cosmetic products BB cream and CC cream, South Korea has a reputation for innovation and for using natural and Oriental medicine ingredients from flowers and tea leaves to donkey milk, snail and seahorse to differentiate its so-called K-beauty products.

"Korean consumers are very sophisticated. Their interest in beauty and expectations of cosmetics are high and they are willing to try new concepts," L'Oreal Korea said. "It's a market where new trends emerge before potentially going global."

For foreign investors, buying into the Korean success story is a convenient way into China, where locals cannot get enough of Korean television dramas and K-pop music.

Mr Ravi Thakran, the chairman and managing partner at L Capital Asia, a unit of Moet Hennessy Louis Vuitton (LVMH), which last month became a major shareholder in South Korean colour cosmetics brand Clio, said: "The popularity of Korean culture such as K-pop, dramas and celebrities boosted significant demand for Korean beauty products in China and other South-east Asian countries."

Beyond China, Korean cosmetics have moved into chains including LVMH's Sephora, Target and Urban Outfitters, according to Korea's state-run trade agency Korea Trade-Investment Promotion Agency.

The LVMH unit's investment in Clio came just weeks after Goldman Sachs and Bain Capital Private Equity said they were buying a majority stake in unlisted cosmetics maker Carver Korea.


A version of this article appeared in the print edition of The Straits Times on August 11, 2016, with the headline 'The draw of fast K-beauty'. Print Edition | Subscribe