[Good Job SME]⑥ Over 20 Years Developing Sun Protection Cosmetics... A Leading Role in 'K-Beauty'

Cosmetics Manufacturer CMS Lab
Interview with CEO Lee Jin-su
Product Innovation through Bold R&D Investment

Editor's NoteSmall and medium-sized enterprises (SMEs) are the backbone of the national economy. Numerically, 99% of companies in South Korea are SMEs. SMEs are the workplaces of the people. 81% of workers are employed by SMEs. When SMEs falter, our economy shakes and the jobs of the people are threatened. However, negative perceptions of SMEs persist. Low treatment and unguaranteed 'work-life balance,' and uncertain future growth prospects. Despite the employment crisis, young people do not choose SMEs. There are people fighting these prejudices and creating good jobs and SMEs. They develop technologies that can compete with large corporations. They also devote efforts to building sound financial structures and corporate cultures to provide stable living foundations for employees. On the ground, there is the struggle of SME owners to fulfill corporate social responsibility while nurturing companies where employees can take pride. Asia Economy visited the field and directly heard their voices.

In the midst of a scorching hot summer under the blazing sun, sunscreen is essential regardless of age or gender. Ultraviolet rays in sunlight increase melanin, a polymer pigment between the epidermis and dermis of the skin. This causes pigmentation such as freckles, age spots, and blemishes. Infrared rays penetrate deeper than ultraviolet rays, raising skin temperature and causing heat aging. There is a company that has been developing cosmetics such as sunscreen and cooling pads, researching "ways to avoid the sun" for over 20 years. This is CMS Lab, a medical cosmetics company.

At the entrance of CMS Lab's headquarters located in Seocho-gu, Seoul, there is an exhibition space resembling a gallery on one side. A large glass light shaped like the sun is installed there. Around it, cosmetics developed by CMS Lab are displayed. Jinsoo Lee, CEO of CMS Lab, introduced, "It symbolizes that we are a company researching sunlight."

At the CMS Lab headquarters located in Seocho-gu, Seoul, lighting and products shaped like the sun are on display.

Founded in 2001, CMS Lab started its initial business targeting hospitals by developing the clinical derma cosmetics brand 'Cell Fusion C.' At that time, there were not many derma cosmetics that shielded the skin from sunlight and enhanced skin tone when going out after laser treatments at dermatology clinics. CMS Lab's Cell Fusion C gained a solid B2B (business-to-business) foundation as it spread by word of mouth in dermatology clinics in Gangnam.

CMS Lab took a leap forward in 2013 when it was acquired by Wonik Group, which operates in the medical and industrial equipment business. As competitor cosmetics focused on B2C (business-to-consumer) were selling like hotcakes in China and other regions, it was judged that there were limits to the existing business alone, and corporate restructuring began. CEO Lee was appointed in 2015 as a savior to implement this. Graduated from Yonsei University with a degree in Chemical Engineering, Lee joined LG Household & Health Care in 1986 and specialized in cosmetics business for 29 years until 2015. Lee said, "I have never done any cosmetics work such as planning, production, marketing, or overseas sales," and added, "I was moved by the management philosophy of the Wonik Group chairman, who prioritizes employee happiness above shareholders, customers, and employees, so I declined several CEO positions and joined CMS Lab."

Lee Jin-su, CEO of CMS Lab.

The first thing CEO Lee did at CMS Lab was to establish a product research and development (R&D) center. Although the company was in deficit at the time, he pushed forward with determination. He mobilized his network built during his tenure at LG Household & Health Care to recruit doctoral-level researchers. Lee explained, "Korea has a well-established cosmetics OEM (Original Equipment Manufacturer) and ODM (Original Design Manufacturer) system, so cosmetics can be easily produced upon order. However, I believe that producing and selling derma cosmetics without securing original technology lacks sincerity, so we focused on research and development."

Lee overhauled the existing product line and did not hastily launch new products during about two years of focusing on technology development. After rigorous testing and efficacy verification, the new product 'Cell Fusion C Expert' was launched in 2017. It contained 'natural ceramide,' which forms a skin protective barrier, further strengthening its position in the hospital market.

Various B2C products centered on sun care were also introduced. In September 2017, Cell Fusion C entered Olive Young and gained great popularity among young consumers. Cell Fusion C ranked second in sales among about 200 sun care category products in Olive Young in 2018. It also ranked first in the sunscreen and lotion categories for two consecutive years in 2016 and 2017 on 'Hwahae,' a domestic beauty mobile platform.

Cosmetics developed by CMS Lab are displayed at the headquarters in Seocho-gu, Seoul.

With increased public recognition through the comprehensive revamp of the Cell Fusion C lineup via research and development, CMS Lab expanded its activities to online channels. In addition to its own mall, it expanded entry into partner malls such as Naver and Coupang. CEO Lee said, "We analyze loyal customers and purchasing patterns using data accumulated through our own mall and utilize it for marketing strategies," adding, "Partner malls are spaces visited by many consumers, so they account for a high proportion of sales."

Exports are also active to 20 countries including China and Vietnam. In 2019, riding the K-beauty wave, sales in China reached 10 billion KRW. Recently, performance in the Vietnamese market has been better than in China, and it is also very popular in Japan, Hong Kong, and Malaysia. Sales grew sixfold from 8 billion KRW in 2015, when Lee took office, to 51.8 billion KRW last year. The plan is to achieve 100 billion KRW in sales next year and then proceed with an initial public offering (IPO).

CEO Lee is also committed to fostering a desirable corporate culture through horizontal communication. On one wall of the CMS Lab office is the phrase "Take off your rank, put on courtesy." Employees call each other by nicknames instead of titles. Lee said, "We hold town hall meetings every quarter and share my concerns as CEO honestly," adding, "The CEO's office door is always open, and I share difficulties with executives and employees."

Lee Jin-su, CEO of CMS Lab.