Korea’s AmorePacific Poised for Success in China’s Booming Beauty Market
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
Korean Pop Culture’s Considerable Influence on Chinese Shoppers ON JUNE 2 2014 | IN MEDIA & ENTERTAINMENT TRENDS | BY RED LUXURY |
Korean pop culture has taken China by storm, and it’s having a big influence on Chinese shoppers. The phenomenon, known as Hallyu, includes Korean pop artists and television shows, and retailers are starting to take notice. The Korean drama My Love From the Star has led to a shopping craze for products featured on the show as well as goods endorsed by the show’s stars. When Song-yi, a main character on the show played by Gianna Jun, celebrates the first snowfall with the traditional chimaek, a meal of fried chicken and beer, Chinese imports of Korean beer hit $1.04 million in March, a 201% increase compared to the year before. In fact, Breweries in Korea are now “aggressively targeting the Chinese market,” and Chinese beer drinkers now have a number of Korean beers to choose from, including a variety of beers from Hite Jinro and OB Beer. Jimmy Choo is another brand that received a sales boost from the show. After the brand’s $625 Abel pump was worn on the show, stores in Shanghai and Beijing were quickly sold out of the shoe, according to The Wall Street Journal. Yves Saint Laurent’s “rosy coral #52″ lipstick worn by Jun and a Samsonite backpack worn by Kim Soo-hyun have also seen sell-outs nationwide. Samsung Mobile in China has already inked the show’s two stars to a $2.5 million endorsement deal and Kim caused a near riot as fans squeezed in to see him at his appearance at the Beijing Auto Show. According to Want China Times, Kim has earned at least 110 million yuan (US$17.6 million) from his appearances in Chinese commercials, and he earned an additional US$480,000 for a single appearance on a quiz show on Jiangsu Satellite TV. Kim Soo-hyun and Gianna Jun aren’t the only Korean stars finding fame in China. According to Inside Korea, Lee Min-ho, the star of the Korean drama The Heirs, recently beat out Kim Soo-hyun for the title of most popular Korean actor in a March survey by Kugou.com in which he won 510,764 votes out of 1.35 million cast in total. The popularity of Korean soap operas in China has led to crossovers in other popular Chinese shows. According to KpopStarz, Korean pop stars Fei of MissA and Nichkhun and Chansung of 2PM will appear on the Chinese dating show If You Love. China Daily has a reasonable explanation for the increasing popularity of Korean shows in China: “Chinese TV screens are flooded by knock-off and/or poorly made soap operas. Most of the Chinese TV dramas either distort the War of Resistance against Japanese Aggression, which is a distortion of history, or blindly copy foreign programs. The lack of good stories has of late resulted in loads of TV series on time travel or fights in the harems of Qing Dynasty (1644-1911) emperors. These, in short, are the bane of Chinese TV productions.” Though Korean dramas began to catch on in China beginning with 1997′s “Star in My Heart,” the new wave of success for Korean dramas is largely due to embracing online streaming. Inside Korea points out that the streaming services allow Korean dramas to skirt Chinese censorship and allow Chinese viewers to watch Korean shows almost simultaneously with Korean fans. Since their premiers, The Heirs and My Love From the Star have gained billions of views on Chinese streaming video websites such as IQIYI. Korean retailers have taken notice of the Hallyu wave in China, which has led to explosive expansion among Korean retailers in Chinese cities. South Korean retailers took up 4.17 percent of Hong Kong’s new leases in trendy shopping areas last year, according to South China Morning Post. Furthermore, six new Korean retailers have opened stores in Hong Kong during the first quarter of this year, triple the number that opened in the first quarter last year. South Korean cosmetic brands, including Etude House, Innisfree, The Saem, and Nature Republic, have also opened stores in Hong Kong over the last two years. As the crossover between Korean and Chinese pop culture continues to grow, look for more Chinese and international brands to expand their product placements and endorsements in Korean pop culture exports. Image source: Drama Fever