Korean beauty brands show signs of turnaround in China

South Korean cosmetics brands are showing signs of a turnaround in China, with their sales in the neighboring country recovering from the slump over the past few years, driving their exports higher in the first quarter of this year.

LG H&H Co., South Korea's second-largest beauty company, posted 10% growth to 213.5 billion won ($158 million) in sales in China.

The revamped product line launch of its flagship luxury brand The History of Whoo in September last year was the main driver of its sales growth.

Whoo appeals to Chinese customers as a brand of Korean royal cosmetics by including traditional Korean cosmetics ingredients used by historic royal families into the formula of its products after clinical testing.

Cosmax Inc.'s Chinese arm logged a 28.6% surge on-year to 157.4 billion won in first-quarter sales.

Aekyung Industrial Co. enjoyed a 7.6% increase in sales in China in the first quarter, led by its beauty brand AGE20’S. The exact value of its sales in China has not been released yet.

To keep the momentum going, the Korea Cosmetic Association will open a Korean exhibition booth with 24 Korean cosmetics companies during the China Beauty Expo – Shanghai, China’s largest cosmetics exposition, May 22-24.

It will be the first time a Korean booth will be set up at the annual event since 2019. The Koreans skipped it from 2020 to 2022 due to the COVID-19 pandemic.

In terms of exports to China, however, AmorePacific Corp. and LG H&H, South Korea’s two largest cosmetics companies, still suffered a drop in the first quarter of this year. But the pace of decline moderated to 8.2% on-year to $591.5 million, compared with the previous year’s 23.1% fall.

FIRST-QUARTER EARNINGS

Overall, earnings at South Korea’s four largest cosmetics companies leaped 39.2% to a combined 213.7 billion won in the first quarter of this year from the year prior, according to beauty industry sources on Thursday.

Their sales climbed 18% to 2.96 trillion won during the same period.

They exported $2.23 billion worth of products in the first three months of this year, up 21.1% on-year, according to the Korea Cosmetics Association, led by a 54.5% surge in exports to the US.

Exports to Vietnam and Japan also rose by double digits, up 21.8% and 19.2%, respectively.

MARKET SHARE IN CHINA

In 2017, K-beauty products topped the Chinese cosmetics market among foreign brands in terms of sales for the first time, beating out France and Japan.

But it fell back to second place in 2019 due to China’s import restrictions from South Korea and patriotic consumption trends in the country.

Since 2020, South Korea has ranked third for four straight years, with its market share sliding to 14.2% last year from 27.0% in 2016.

Some industry observers are doubtful about any meaningful rebound in Korean cosmetics sales in China.

"It remains to be seen whether K-beauty products will be able to enjoy another heyday in China, given patriotic consumption trends in China and the rise of its homegrown brands," said a Korean cosmetics industry official.

Write to Hyung-Joo Oh at ohj@hankyung.com

Yeonhee Kim edited this article.