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K-Beauty hits the mainstream with e-commerce and comprehensive support

During the pandemic, most industries are suffering. Yet, ironically K-beauty industry is doing better than ever.

The global market has contracted due to the COVID-19 crisis, and the cosmetics industry is no exception. As the export and consumption of make-up has dropped sharply, the cosmetics industry needs to find innovative ways to achieve new breakthroughs. The biggest problem lies in the packaging. With all the Chinese factories closed, matching the supply for the demand of containers and dispensers has become extremely difficult. On top of that, sales of make-up have dropped drastically, considering that people are no longer going out.
Global cosmetics companies such as Beiersdorf AG, Chanel S.A., Coty Inc., Estee Lauder Companies Inc., Henkel AG & Company, KGaA, Johnson & Johnson, Kao Corp, L Brands, Inc., and L’Oreal SA are also facing the severe consequences of COVID-19.
Amidst this situation, ironically, in March, Korea’s cosmetics exports amounted to a record high of about USD 770 million, or KRW 950 billion, because exports of cosmetics to Russia and China have increased sharply. However, it was not the expensive cosmetic products from large companies, but instead cosmetics from small and medium-sized companies at various price points that increased in exports. It seems that cosmetics from small and medium-sized companies are becoming more popular abroad.
Despite the pandemic situation, Korea's cosmetics exports rocketed high

According to the Korea International Trade Association, imports of cosmetics by Russia rose from USD 1.55 million dollars in 2014 to USD 13.37 million in 2019, nearly a 9-fold increase over a period of 5 years. Korea is the second largest exporter of cosmetics after France. Small and medium-sized brands using inexpensive and unique natural ingredients are becoming more popular. Russian ranked first in Europe and sixth in the world for imports of Korean cosmetics in 2019.
Also, as Korean products are very popular in skincare routines, various posted recommendations about skincare, such as 13 Best K-Beauty Cosmetics and 5 Best K-Beauty Cosmetics, are gaining considerable popularity. Nevertheless, with COVID-19, the entire Korean beauty industry is in need of a breakthrough because of the economic downturn. E-commerce is currently emerging as a strong alternative.

e-Commerce
In March, Shinsegae International promoted herbal cosmetics “Yeongjak” to China through live broadcasts, and realized sales of KRW 150 million in an hour, setting a new sales record. These online sales outlets are regarded as relief pitchers that are leading K-Beauty promotion in a situation where sales by duty-free shops and department stores have been sluggish due to the coronavirus crisis. According to the Korea Trade and Statistics Agency, Chinese cosmetics imports last month increased by 49% from a year ago, realizing a 63% increase over the previous month. As the coronavirus peaked in China in February, this is interpreted as an increase in domestic demand for cosmetics centered on online malls in March.
“Koreana,” a cosmetics company located in Suwon, Gyeonggi-do, has begun to target the Chinese online market. A flagship store will be opened in China’s largest online shopping mall, “Tmall Global,” and will enter the Alibaba Group’s platform to target China’s major cosmetic consumer group (those in their teens to 20s).
Another Korean company, JOLSE, located in Suwon, Gyeonggi-do, operates an online shopping mall selling 250 Korean cosmetics brands to consumers in 150 countries around the world. With a total of 600,000 subscribers, the monthly number of users ranges from 600,000 to 650,000 people. Most of JOLSE’s customers are non-Koreans purchasing K-Beauty products. Realizing sales to more than 160 countries worldwide, the United States alone accounts for 25% of the company’s total sales. At the same time, Nikki Moran, a Russian influencer with 170,000 subscribers, continues to gain popularity by introducing COSRX’s cleansing powder via YouTube.
E-commerce (online shopping) is covering up the sales decrease in duty-free shops and department stores

Due to COVID-19, duty-free shop sales are plunging and inventory issues are becoming more serious. In this situation, the cosmetics divisions of L’Oreal, the world’s largest cosmetics company, and Louis Vuitton Mohenec (LVMH), a French luxury group, also face declines in sales. However, the growth of the e-commerce sector has attracted much attention and is now seen as a strong alternative to sluggish domestic duty-free shops.

Subscription Economy
Another emerging alternative is the subscription economy. A consumer receives a desired product or service as a “subscription” for a certain amount of money per month. The subscription economy is a new distribution service concept that has begun to attract attention as the number of single-person households increases. In addition to cultural content in movies or dramas, this service is actively being utilized in fields related to food and electronic products. Netflix is an example of a subscription economy service.
The very first beauty subscription box from Birchbox
ⓒ Jeanna @flickr


The subscription economy market for cosmetics is based on the example set by Birchbox of the United States in 2010. For USD 10 a month, several cosmetic samples were shipped to the subscriber. As of 2019, this subscription service had more than 1 million members paying for and receiving monthly products.
Recently, K-Beauty has also been growing in Singapore, and one of the reasons for this has been the advent of K-Beauty subscription services. Typical cosmetic subscription services include Nomakenolife and PinkSeoul, with their customers receiving a ‘subscription box’ containing various skincare products, cosmetics, mask packs, hair care items, and beauty accessories on a regular basis.
Tone 28, a domestic unicorn company (beauty start-up), is operating a subscription service that provides customized cosmetics by diagnosing customer skin types. It received an investment of KRW 500 million from AmorePacific, and is likely to be invited to attract investments from global cosmetic brands and overseas venture capital. In addition, as existing small and medium-sized brands participate in subscription economy services, large companies are also expected to get onboard the “subscription economy train.”
In the case of cosmetic subscription box products provided by FaceTory, you can receive a variety of products regularly depending on the price range, and free shipping in the United States is provided if certain conditions are met. Their subscription service has become very popular in the United States.
Gyeonggi Province's K-Beauty Support
Gyeonggi Province, the center of Korea’s K-Beauty industry, provides various supports and benefits to vitalize the K-Beauty industry that is now expanding throughout the world. First, the province holds the K-Beauty Expo inAsian regions with large potential markets, such as Indonesia and China, and also supports overseas expansion by several small and medium-sized beauty companies in Korea.
K-beauty Expo is held by Gyeonggi Province to support overseas expansion of Korean cosmetics companies.

Recently, the Gyeonggi-do Beauty Trade Promotion Group held a total of 126 business consultations in France and Spain, centers of the beauty industry, during comprehensive cosmetics export conferences. Export contracts valued at USD 48.91 million in France and USD 78.45 million in Spain were initiated through business consultations.
In order to advance the beauty industry, Gyeonggi-do and the Gyeonggi-do Cosmetics Association will undertake the “Domestic and International Beauty Production Certification Support Project” to support small and medium-sized enterprises in all stages from international standard certification to product development. It is a project that supports the consultation and certification costs required for the overseas export of cosmetics.
Gyeonggi-do aims to provide small and medium-sized enterprises that lack marketing or commercialization capabilities and/or design expertise with opportunities to develop and expand through a product design and development support project. A total of 35 companies will be selected to participate in this project, and their direct costs for products (containers and subsidiary materials), package design, branding development, prototype production, and professional service costs for industrial and visual design will be supported. 
Inner Bottle's packaging

Last year, an eco-friendly cosmetic container developed by Inner Bottle Co., Ltd., which was supported by this project, won in the concept design category at the 2019 Red Dot Design Awards. In this and many other ways, the beauty industry supported by Gyeonggi-do has demonstrated enormous potential, and is expected to see even greater growth in the future.

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Gyeonggido-Korea: K-Beauty hits the mainstream with e-commerce and comprehensive support
K-Beauty hits the mainstream with e-commerce and comprehensive support
During the pandemic, most industries are suffering. Yet, ironically K-beauty industry is doing better than ever.
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