K-beauty exports to China rebound after 4-month slump

South Korea’s beauty industry is showing signs of recovery in China, with exports rebounding after four months of decline.

The turnaround follows aggressive economic stimulus measures by the Chinese government, which have helped revive consumer sentiment in Asia’s largest economy.

Further optimism is building around the possibility of China lifting its unofficial restrictions on imports of Korean cultural products, potentially paving the way for expanded exports, analysts said.

According to the Korean alternative data platform KED Aicel, Korea’s cosmetics exports to China reached $197.5 million in March, a 10.4% increase from a year earlier.

The increase marks the first positive growth since October 2024.

Exports of K-beauty products to China turned negative last November with a 7.3% on-year fall.

In January this year, cosmetics exports to China fell 45.6% before narrowing their decline to 1.96% in February and returning to positive territory in March, according to KED Aicel.

KED Aicel is the alternative data service brand of Hankyung Aicel, renamed from Aicel Technologies Inc. after The Korea Economic Daily acquired the data firm from US-based policy and global intelligence provider FiscalNote Holdings Inc. for $8.5 million last October.

SKINCARE PRODUCTS LEAD GROWTH

Skincare products, which accounted for 54% of Korean cosmetics exports to China in March, played a key role in the recovery.

Exports of goods in this category rose 25.4% on-year to $107.7 million.

Exports of haircare products rose 14.9%, while facial masks gained 6%, contributing to the overall increase.

However, some categories saw a continued decline.

Sales of color cosmetics fell 32.6%, while perfume sales declined 21.4%.

Industry officials said the Chinese cosmetics market is bottoming out.

“The worst seems to be over after hitting the trough in the fourth quarter,” said an executive of a Korean cosmetics company operating in China.

Analysts said China’s economic stimulus policies, including Yi Gu Huan Xin, which encourages discarding old products to buy new ones, are leading to a modest increase in sales.

China’s retail sales grew 4% in the first two months of this year from the year-earlier period, while cosmetics consumption rose 4.4%, indicating a broader economic recovery.

BAN ON K-WAVE

If, as expected, China lifts its ban on Korean products, demand for Korean beauty brands will rise further.

Sources said in February that China will likely lift its ban on Hallyu, or Korean popular culture, in the country as early as May amid escalating Beijing-Washington trade conflict.

The move, if confirmed, comes eight years after China imposed the K-wave ban in 2017 in retaliation for Korea's deployment of THAAD, or the US terminal high altitude area defense missile system.

The move will likely lead to the removal of China’s restrictions on the distribution of Korean content, including drama series, movies, games and K-pop performances, as well as sales of Korean consumer goods, including cosmetics, in the country.

LG H&H, COSMAX

Once the ban is lifted, major Korean cosmetics firms such as LG H&H Co. and Cosmax Inc. with significant exposure to China are among those to benefit the most, analysts said.

LG H&H, formerly LG Household & Health Care, derives around 20% of its revenue from China.

Cosmax, Korea's biggest cosmetics original development and design manufacturer (ODM), generates nearly 30% of its revenue in China.

“Cosmax’s Chinese subsidiary aims for 10% growth this year, but if China’s economic recovery gains momentum, its performance will exceed expectations,” said Jo So-jung, an analyst at Seoul-based Kiwoom Securities Co.

Write to Jiyoon Yang at yang@hankyung.com

In-Soo Nam edited this article.