Korea launches $27 mn fund to invest in K-beauty startups

South Korea’s Ministry of SMEs and Startups on Thursday announced the launch of a 40 billion won ($27 million) fund to invest in Korean beauty startups to support their global expansion following US tariff hikes.

Kolmar Korea and Cosmax Inc. – the world’s leading original development manufacturers (ODM) of cosmetics products – are anchor investors in the fund.

The fund is the first of its kind dedicated to companies across the supply chain of South Korea’s beauty industry, established through a public-private partnership.

Cosmetics are the top export item for South Korea’s small and medium-sized enterprises (SMEs). Last year, exports reached a combined $6.8 billion, making cosmetics the first Korean SME product category to surpass $6 billion in overseas sales.

However, US tariffs could deal a direct blow to the domestic beauty industry, which depends heavily on exports. 

The Trump administration slapped South Korea with 25% reciprocal tariffs, effective April 9, though the measures have been temporarily paused for 90 days.

"If US tariff measures become a reality, it will place a heavy burden on not only our companies, but also those of other countries,” Oh Youngju, minister of SMEs and Startups, said during a conference announcing the launch of the startup fund.

“If K-beauty's strong innovation, high quality and the Korean Wave effect continue, this could become an opportunity for our small and venture businesses to expand their market presence,” she added.

Kolmar Korea operates a factory in Pennsylvania and is on track to complete its second US plant by the end of June. Cosmax also runs a manufacturing facility in New Jersey.

Write to Jung-Hwan Hwang at jung@hankyung.com
 

Yeonhee Kim edited this article.