Stop Waiting for Youke... K-Beauty Runs Global Again

Amore·LG Household & Health Care Enter Hainan Duty-Free Zone One After Another
Also Launching on Local Online Platforms Like Shopee in Southeast Asia and Amazon in the US

[Asia Economy Reporters Yujin Cho and Minyoung Cha] As mask-wearing has become routine due to the novel coronavirus infection (COVID-19), the beauty industry, which has struggled to recover its performance, is turning its attention to overseas duty-free shops and local online shopping malls. With growing interest in 'K-Beauty,' instead of waiting for Chinese group tourists (Youke) to come, companies are actively going out to meet them.

◆ Accelerated Entry into China's Hainan Duty-Free Zone = According to the beauty industry on the 19th, Amorepacific operates a total of 11 offline stores across four locations in the Hainan duty-free zone, including downtown duty-free shops (Haitang Bay, Haikou, Boao) and Haikou Airport duty-free shop. Three representative brands?Sulwhasoo, Laneige, and Innisfree?are present. Amorepacific has formed a dedicated team for the Hainan duty-free zone to strengthen local response strategies.

Recently, they signed a strategic business partnership with China Duty Free Group (CDFG) to cooperate on opening new stores and marketing promotions. In fact, sales in the Hainan duty-free zone began to rebound from June to July, when the spread of COVID-19 in China subsided, having a positive impact.

LG Household & Health Care also has stores in three downtown duty-free shops and one Haikou Airport duty-free shop within the Hainan duty-free area. Their two representative brands are Whoo and Su:m37.

In the case of L&P Cosmetic, the mask pack brand Mediheal is present in three locations: Haitang Bay downtown duty-free shop, Haikou Airport duty-free shop, and downtown duty-free shop. Mediheal is also preparing to enter an additional CDFG downtown duty-free shop in the Shanghai area. Aekyung Industrial, which owns Age 20's and Luna, is also considering entry into Hainan.

◆ Expanding into Southeast Asia, Americas, and Europe = Companies are actively entering major local shopping malls as well. Aekyung Industrial has entered four Southeast Asian markets by listing 'Age 20's' and 'Luna' on 'Shopee,' the largest online commerce platform in Southeast Asia. With this entry, Aekyung Industrial has expanded its presence from the previous three countries?Thailand, Indonesia, and Vietnam?to six countries including Singapore, the Philippines, and Malaysia.

Earlier in June, Aekyung Industrial opened an official Age 20's brand store on Amazon, the world's largest e-commerce company, expanding its reach into the U.S. market. Aekyung Industrial officials stated, "We plan to add 'A Solution,' 'Flow,' and the household goods brand 'Kerasis' to the platform and expand into countries such as Taiwan."

Amorepacific has also entered the U.S. market through Amazon. This is a premium beauty store curated directly by Amazon headquarters. Amorepacific and Mamonde first entered the U.S. offline market in 2003 and 2018 respectively and are now expanding their platforms online.

LF's vegan cosmetics brand ATE also made its first overseas entry after brand launch by entering Xiaohongshu, the Chinese version of Instagram, in June. The strategy is to increase brand awareness and connect sales through direct overseas purchases. An LF official said, "Starting with China, where entry barriers are relatively low, we plan to expand our presence to Southeast Asia, the Americas, and Europe, where preference for K-Beauty is increasing."

◆ The Era of Chinese Daigou is Over = The reason K-Beauty companies are turning to overseas duty-free shops and local online shopping malls is that the number of Youke visiting Korea has drastically decreased due to COVID-19.

The number of foreign customers at domestic duty-free shops was 75,000 in August, down to about 1/23 of the approximately 1,614,000 in January before the COVID-19 outbreak. Although the number of corporate Chinese daigou has shown signs of recovery in the second half of the year, the number of general Chinese tourists has decreased, making it impossible to rely solely on duty-free shops.

A cosmetics industry official said, "I heard that daigou volumes have almost recovered to previous levels in the second half of this year, but the number of general Chinese tourists entering the country is still extremely insufficient. The industry believes that some brands established in Hainan have experienced relatively smaller declines in performance compared to the previous year."

Not only China and Southeast Asia but also the U.S. and European markets are becoming new opportunities. An industry official evaluated, "In the U.S. market, where preference for K-Beauty is recently increasing due to the influence of Hallyu culture such as BTS, the market environment is improving with an increasing number of bloggers specializing in evaluating Korean cosmetics."