Korean Cosmetics is now in demand

The South Korean trade balance for beauty products was in surplus for the first time last year. According to South Korea’s customs office, cosmetics exports reached 1.92 billion dollars in 2014, that is, an increase of 50.4% over the previous year.

This is a spectacular reversal, considering that from 2001 to 2012, the annual deficit exceeded 400 million US dollars and only started to decrease in 2013.

With imports totaling 600 million US dollars, mainland China is the top destination of “Made in Korea” cosmetic products. Other key importers are Hongkong (USD 410 million), the United States (USD 160 million), Japan (USD 150 million), and Taiwan (USD 120 million), followed by Singapore and Thailand.

Actually, the popularity of K-Beauty remains primarily an Asian phenomenon. However, the number of destination countries of Korean cosmetics is increasing regularly.

It’s no secret that South Korean cosmetics brands are a hot item riding a wave of buzz around Korean Products that extends to music, dramas and fried chicken.

But there’s still lots of room to grow, says market researcher Nielsen. In a report published Wednesday, Nielsen found that six of ten consumers in China, Hongkong, Taiwan and Singapore have only just “discovered” Korean beauty brands in the past two years. Of the respondents who bought Korean beauty brands, 40% were planning to spend more in the next months, the survey found.

“Our study showed a direct correlation between interest in Korean entertainment and interest in Korean cosmetic brands, particularly among consumers in China,” one Nielsen China executive said.

AmorePacific stock has shot up so much that, with its stock now trading at more than US$3,000 per share, the company decided to split its shares ten-for-one earlier this month — a move that in turn sent AmorePacific shares up by the daily limit of 15% on the day of the split announcement.

On Wednesday, AmorePacific shares tacked on another 3.2%, to 3,383,000 Korean won ($3,069) — more than eight times its initial listing price in 2006.

The Korean brands may not want to rest on their laurels, though. Nielsen notes that, while Chinese consumers have quickly grown in sophistication, the gold standard still remains French beauty products, which outrank Korean brands in Chinese consumers’ minds in reputation and quality, according to the survey.