Shared from Business of Fashion
Two of South Korea’s largest cosmetics companies are struggling to maintain their position in China as consumers there continue to eschew Korean-made beauty products in favour of those from Chinese and Western brands.
AmorePacific and LG Household & Health Care (LG H&H) have mostly lost market share to Chinese brands, which have improved their product quality and design in recent years and launched successful localised marketing campaigns.
LG H&H’s sales and operating profit fell by 3.4 percent and 5.9 percent, respectively, in the fourth quarter of last year, and while AmorePacific has not yet revealed its performance, local securities firms expect its operating profit to fall by more than 10 percent compared to the same period previously.
“In the fourth quarter of 2021 AmorePacific is expected to achieve a turnaround with an operating profit of 40.6 billion won year-on-year, but it is not close to the 46 billion won that the market expected,” IBK Securities research Ahn Ji-young told the Korea Times.
The decline of Korean cosmetics brands in China is also due to consumers increasingly preferring Western brands such as Estée Lauder and L’Oréal, a trend which pushed AmorePacific and LG H&H out of the top 10 skincare brands in China in 2021, according to Euromonitor.
The continuing impact of Covid-19 restrictions has also impacted sales.
China is the largest market for the two Korean cosmetics giants, with AmorePacific’s sales there believed to account for more than 70 percent of its revenue in Asia, a region which makes up 94.5 percent of the company’s total overseas business. The figures for LG H&H are similar, meaning both K-beauty companies must make interventions to stem further decline in the China market.
Learn more:
K-Beauty Giant Amorepacific Looks to Shift Gears In China
Amorepacific president Kim Seung-hwan reportedly dropped hints about a strategic shift for its approach to the China market during a meeting with local analysts.
Images and Article from Business of Fashion
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