China ban on South Korean imports puts K-beauty under pressure


South Korean cosmetics brands will need all their innovation as the China market tightens over THAAD issue, writes Jens Kastner

The cosmetics sector of South Korea, evaluated at US$12bn in 2016 by market researcher Frost & Sullivan, has been enduring a tough crash-course in political risk since its government agreed to host the US antiballistic missile defence system Terminal High Altitude Area Defence (THAAD).

Although THAAD’s declared aim is to defend South Korea from North Korea’s missiles, China perceives itself the as the real target and opposes the deployment vehemently. Its government is not averse to using nationalism to whip up consumer reaction against countries it does not like and the South Korean cosmetics segment – commonly referred to as ‘K-cosmetics’ – is a victim.

There has already been a falling off of visits from Chinese tourists, who usually shop Kcosmetics till they drop; Chinese customs are now banning some K-cosmetics; and Chinese ecommerce websites have discontinued some sales. That the Korea Cosmetic Association dedicated the first 11 pages of its 35-page March 2017 report to THAAD certainly speaks volumes.

Nevertheless, amid the huge popularity of Korean popular culture across East Asia, Kcosmetics’ standing in the Chinese market had been towering, meaning the situation is still not that dramatic in concrete figures.

“2016 had been a tough year with political issues, but these obstacles didn’t spoil full-year data, as the K-beauty preference in China continued to be strong until the THAAD issue popped up,” says Seongmin (Mike) Sohn, a researcher with the Korea Cosmetic Industry Institute’s (KCII) planning research team.

This is supported by KCII data showing that cosmetics manufacturing in South Korea...

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