* South Korean cosmetics firms see strong sales in China
* Korean firms take on brands owned by L'Oreal, P&G
* Korea brands seen more suitable for Asians; prices
* China's personal care and cosmetics market worth $34 bln
By Hyunjoo Jin
SEOUL, Aug 8 Cosmetics brand Laneige has a
French name and luxurious blue-and-white packaging but its
legions of fans in China, the world's third-largest beauty
products market, love it because it is South Korean and
Laneige, or "the snow", is one of about two dozen brands
made by South Korea's biggest cosmetics company Amorepacific
Corp which is using its Asian cachet and
pocket-friendly prices to give global firms like L'Oreal SA
, and Procter & Gamble Co a run for their money.
Other South Korea cosmetics manufacturers like LG Household
& Healthcare and Able C&C are also using
similar strategies to expand in China's beauty and personal care
market, which is estimated to be worth $34 billion this year.
"We're taking aim at P&G's Olay and L'Oreal Paris in China's
mass market segment with our entry-level brands," said Lee
Chang-kyoo, head of Amorepacific's corporate strategy team.
"Our company is able to quickly read market trends and roll
out products when something is in vogue," Lee told Reuters.
"Recently Chinese local brands are also really doing well, so
they are also our competitors."
Paris-based L'Oreal and Cincinnati, Ohio-based P&G declined
Korean beauty brands have little global renown, but in Asia
they are household names because of perfectly groomed celebrity
ambassadors such as actress Song Hye-kyo, singer Yoona of Girls'
Generation and male entertainer Kim Hyun-joong.
Korea's vibrant entertainment industry has wide appeal in
the region, and its stars are often held up as an ideal of
beauty by both men and women.
On its website, Amorepacific says it wants to be thought of
as the "Asian beauty creator" and its sales figures suggest it
is winning over more Chinese customers.
Amorepacific saw the fastest sales growth in skin care
products among the top 10 cosmetics companies in China last
year, data from consumer research firm Euromonitor shows.
The Korean firm's China sales jumped 34 percent
year-on-year, outperforming market leader L'Oreal's 13 percent
increase, second-ranked Shiseido Co Ltd's 12 percent
rise and third-ranked P&G's 5 percent growth.
Amorepacific also increased its share in China's skincare
market by 0.5 percentage points to 2.6 percent last year,
according to Euromonitor.
That compares with a 0.5 percentage point growth in
L'Oreal's market share to 16.8 percent during the same period,
and a 0.4 percentage point fall for P&G to 9.8 percent.
Zhang Pinghua, a 52-year-old Shanghai woman who usually buys
products from Estee Lauder Companies Inc, started using
Laneige face masks on a friend's recommendation.
"It fits Asian skin more," said Zhang.
Her 22-year-old daughter, Shen Ruyi, is a fan of The Face
Shop, a low-cost brand of LG Household and Healthcare, a unit of
the LG conglomerate.
"My school mates use it because it is cheaper than some
Japanese brands," she added.
BULGING BEAUTY BOX
Japan is currently Asia's biggest cosmetics market but
second-ranked China is growing at a much faster pace -
Euromonitor forecasts 63 percent growth in China for the five
years ending 2015 compared with flat growth for Japan.
Amorepacific posted on Tuesday a 35 percent increase in its
second quarter China sales. LG Household and Healthcare's The
Face Shop brand also posted a 52 percent jump in sales in China
and Japan in the same quarter.
Most of the Korean cosmetics firms are targetting the
mid-to-low end of the China market by rapidly opening stores and
bombarding customers with hundreds of new products each year.
The Korean firms are able to offer so many products so
quickly because they outsource production to companies such as
Cosmax Inc, which also supplies L'Oreal, said Tiger
Kim, head of Seoul-based consultancy CosmeticConsulting.
For example, Amorepacific's budget Innisfree brand launched
100 make-up and 70 skin care products in China in the first half
of this year alone. The demand for cheaper cosmetics is rapidly
growing in South Korea too, where global brands have been
eclipsed by their domestic rivals in recent years.
Able C&C, owner of the budget Missha brand, relies on
another strategy: it makes products that are similar to luxury
cosmetics but which sell for a fraction of the price, such as a
skin smoothing lotion that it markets as a cheaper alternative
to the flagship product of P&G's high-end SK-II brand.
The company says it has 1,120 stores in 25 countries
including China, Japan and the United States and plans to
venture into Europe and South America next year.
"Most Korean beauty products emphasise natural ingredients
and they are made for Asian skin. They are endorsed by various
Korean celebrities as well," said Lui Meng Chow, a research
analyst at Mintel, a global consumer research company.
"Their mid-range Korean beauty care products' entry into
China will certainly impact the multinational brands."