"K-Beauty Enters a Phase of Sustainable Growth"
"Integrated Advisory Solutions Provided for Each Stage"
On November 28, Samil PricewaterhouseCoopers announced the publication of the "K-Beauty Industry Status and Accounting & Tax Guide Book," which contains essential information for the sustainable growth of K-beauty companies.
This guidebook comprehensively covers the current status of the K-beauty industry, operational strategies for cosmetics companies at each stage of their lifecycle, accounting, tax, and internal control issues, as well as basic accounting and tax information for startups.
"Cosmetics Exports Expected to Hit an All-Time High This Year"
Recently, the K-beauty industry has developed an ecosystem where anyone with a brand or product idea can start a business. The guidebook was published to systematically provide the information necessary for the continued growth of domestic cosmetics companies.
According to the guidebook, Korea's cumulative cosmetics exports for the third quarter of this year (July to September) reached 8.5 billion dollars (approximately 12 trillion won), marking a 14.9% growth rate compared to the same period last year. The total cosmetics export volume for this year is expected to far exceed 10 billion dollars, following last year's record high of 10.2 billion dollars.
In particular, this year, the United States has overtaken China to become Korea's largest export destination. Other major consumer markets such as Japan and the European Union are also recording double-digit growth rates. The rapid global growth is attributed to the innovative planning of indie brand products, excellent quality, localized marketing, and the role of specialized distribution platform companies.
First, the guidebook categorizes the K-beauty value chain into raw materials, packaging materials, Original Design Manufacturing (ODM) and Original Equipment Manufacturing (OEM), and brands (comprehensive cosmetics·brand manufacturing·brand) as well as platforms, presenting the characteristics and major companies at each stage.
"From Funding to M&A and IPO: Strategies for Each Growth Stage Required"
The guidebook also details the factors that K-beauty startups need to consider at each growth stage, from funding to mergers and acquisitions (M&A) and initial public offerings (IPO). Growth strategies for K-beauty startups include: ▲ developing specialized products and establishing brand identity ▲ expansion strategies with a global market in mind ▲ developing sustainable and eco-friendly products ▲ digital and direct-to-consumer sales strategies.
Finally, the guidebook addresses key accounting issues that K-beauty companies should consider, such as revenue recognition, inventory valuation, customer loyalty programs, business combinations, and impairment reviews. It also covers major tax issues, including considerations under corporate tax and value-added tax laws regarding promotional events, returns, tester products, and mileage. Strategies for strengthening internal controls to prevent fraud such as embezzlement, as well as procedures for managing risks related to uncollected sales proceeds, are also included.
Kim Youngsun, K-beauty Industry Leader (Partner) at Samil PricewaterhouseCoopers, stated, "The current heyday is not a temporary phenomenon but a phase of sustainable growth, thanks to the establishment of a complete ecosystem, the global popularity of K-culture, and the virtuous cycle created by the influx of talented individuals and capital." He added, "Samil PricewaterhouseCoopers will provide optimal integrated advisory solutions throughout the entire growth process of K-beauty companies, based on quality and industry expertise."
The full report is available on the Samil PricewaterhouseCoopers website.
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