China’s obsession with Korean pop culture is fueling the success of Amore Pacific, South Korea’s largest cosmetics company according to sales.
Over the past year, AmorePacific’s share price has increased by almost 160 percent to around Won2.3m. One-fifth of the company’s revenue comes from outside South Korea, and overseas sales increased by 38 percent to Won382.7bn ($349m) during the first half of this year. AmorePacific’s overseas sales for all of 2014 “are expected to reach Won700bn as growing interest in South Korean drama and music helps boost sales of its skin care products in China and other parts of Asia,” according to FT.com.
China is of particular importance to the brand, according to its vice-president in charge of business strategy, Sean Kim, who calls it AmorePacific’s “biggest and most important market.”
“The Korea Wave has certainly been helpful in raising our brand awareness in the region,” Kim said. “We aim to become the Asian beauty creator by answering Asian women’s strong needs for clean and bright skin.”
Though AmorePacific is “still finding its feet in China” and only has a 1.2 percent share of the country’s personal care and beauty market, the brand has high hopes for expansion. AmorePacific already maintains about 3,500 shops in China. Also, around half of the company’s overseas sales currently come from China, and those sales are expected to “jump more than 40 percent a year to top Won3tn by 2020 from Won338bn last year.”
The company has also built a new research center and cosmetics factory in Shanghai, which is projected to increase its annual production capacity by 10 times to 100 million units, as the brand competes with “bigger western rivals such as P&G and L’Oreal.”
Kim emphasizes that high quality is essential in advertising AmorePacific products to Chinese consumers. The brand is tailoring new products such as ultra-hydrating creams, collagen drinks, and cleansing creams to meet consumer concerns about dry weather and pollution.
“While emotional communication is effective for Korean consumers, Chinese women often ask for more scientific functions such as whitening and anti-aging.”
image credit: amore pacific