Korean cosmetics penetrated the Chinese market riding on the back of the Korean TV drama wave. But these days, their position in China is being undermined. This is because they do not have a distribution line of their own in China as they rely on Chinese peddlers who buy small quantities of Korean cosmetics in Korea and sell them in China. To make it matters worse, Japanese and Chinese cosmetics are now gaining popularity in China.
Korean cosmetics brands failed to break into the top 10 in sales rankings of Tmall and Taobao in both the foundation and color categories in July this year as Chinese brands made a big leap. Tmall and Taobao are e-commerce leaders in China.
While Korean cosmetics brands suffered from a slump, Japan emerged as the largest cosmetics exporter to China in the first half of this year. In this period, Japan posted a 23.9 percent share of China's imported cosmetics market, slightly more than Korea’s 23.7 percent, according to the Global Trade Alert (GTA), which studies international trade.
China’s imports of Japanese cosmetics swelled 44.4 percent from a year earlier, while Korea posted a 15.4 percent increase in exports to China. Japanese cosmetics producers have been investing in China based on their enormous financial power, while Korean companies have failed to expand local sales channels as they relied on Chinese peddlers.
Some experts point out that Korean beauty producers are no longer expanding their market shares in China because of their simple export strategy focusing on basic skin care products. "More than 90 percent of Korean cosmetics exported to China are basic products," said an industry insider. “Instead of relying on basic products that are easy to copy, Korean cosmetics companies need to widen the range of their export products and include colors, hair care products and perfumes by maximize their technological power."