Hallyu, or the Korean wave, is sweeping the global cosmetics market. As the K-Beauty trend in China is now expanding to Europe such as Italy and France, the home of cosmetics, South Korea’s cosmetics industry posted a trade surplus of over three trillion won last year.
According to the Ministry of Food and Drug Safety on June 27, the nation’s actual cosmetics output stood at 13.05 trillion won (US$11.46 billion) last year, up 21.6 percent from 10.73 trillion won (US$9.43 billion) in 2015. The increase in cosmetics production surpassed 20 percent last year for the first time. In particular, the amount of cosmetics exports increased due to the growing popularity of Korean beauty products with the trade surplus of 3.6 trillion won (US$3.16 billion). The figure was up 112 percent from 1.7 trillion won (US$1.49 billion) of the trade surplus in 2015.
Market sources say that South Korean cosmetics industry has shown a rapidly growth as it has continuously improved systems by introducing negative list systems for cosmetic ingredients as well as a high competitiveness of a high price-performance ratio of products.
By category, basic skincare products ranked top in terms of production output with 7.59 trillion won (US$6.66 billion), or 58.12 percent, followed by make-up products with 2.3 trillion won (US$2.01 billion), or 17.56 percent, hair care products with 1.41 trillion won (US$1.24 billion), or 10.8 percent, and body wash products with 1.16 trillion won (US$1.02 billion) or 8.92 percent.
By group, AmorePacific took first place with 4.39 trillion won (US$3.85 billion), or 33.64 percent, followed by LG Household & Health Care with 3.58 trillion won (US$3.15 billion), or 27.45 percent, Aekyung Industrial with 252.8 billion won (US$221.95 million), or 1.94 percent, and Innisfree with 196.1 billion won (US$172.17 million), or 1.5 percent. With growing exports of facial masks and cushion foundations, costory, Carver Korea, The SAEM International and Clio rounded out the top 20 in terms of production output.
Exports of cosmetics surged 65.6 percent from US$2.59 billion (2.95 trillion won) in 2015 to US$4.18 billion (4.85 trillion won) last year, showing an average growth rate of 39.76 percent in the past five years.
On the other hand, imports of cosmetics slightly dropped from US$1.09 billion (1.25 trillion won) in 2015 to US$1.08 billion (1.23 trillion won) in 2016. Accordingly, the nation’s trade surplus in the cosmetics sector has grown steeply from US$752.5 million (851.4 billion won) in 2014 to US$1.5 billion (1.7 trillion won) in 2015 and US$3.1 billion (3.6 trillion won) in 2016. South Korea’s cosmetics trade balance swung to a surplus in 2012 for the first time.
Chinese speaking countries, such as China, Hong Kong and Taiwan, are still the largest importers of South Korean cosmetics products. However, export markets are becoming diversified. Exports of cosmetics to France, the home of cosmetics, increased as much as 138.4 percent last year compared to the previous year, while the figures to Italy and Spain showed a whopping increase of 246.6 percent and 276 percent.
Spain and Italy made the top 20 list in terms of exports. Exports of cosmetics to China amounted to US$1.57 billion (1.79 trillion won) last year, while exports to advanced countries, including France, Italy and the U.S., totaled US$646.96 million (737.86 billion won), up 76.8 percent from US$365.78 million (417.17 billion won) in 2015.
Sohn Mun-gi, vice minister of food and drug safety, said, “The K-Beauty has seen a rapid growth thanks mainly to the government’s effort to improve regulations and support programs, including the expansion of functional cosmetics regions. We will continuously help domestic cosmetics products export smoothly to other countries and ease procedural regulations unrelated to safety through talks with regulators in the future so that the beauty hallyu can spread all over the world.”