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Korean beauty brands conquer China

News, 01 April 2016

SHANGHAI: Chinese consumers are flocking to South Korean beauty products, which now account for almost a quarter of all cosmetic imports to China, with this growth coming at the expense of established Western brands.

According to L2's "The Beauty China: The Rise of Korean Brands" insights report, as reported by Luxury Daily, Western skincare and colour cosmetics brands saw their market share decline 4.8% and 3.8% respectively in 2014.

Meanwhile, South Korean beauty brands have grown 126% in just a year and L2 attributed their success to mid-range pricing, online marketing, innovative products and ingredients, as well as intelligent use of blogger and vlogger support.

"South Korean products are perfectly positioned for the current climate, with excellent price to value ratios and often touting natural ingredients," said Danielle Bailey, research director at New York-based L2.

"Both online and offline Korean brands are expanding their reach. Beauty bloggers and vloggers always on the hunt for the next thing have already begun to feature South Korean products, introducing them to a global audience."

L2 said that South Korean brands are excelling online where they have incorporated functionality and content to drive loyalty and experimentation to the extent that they score highly on popular Chinese social sites, such as Weibo.

For example, the Laneige skincare brand leads all others on Weibo with more than 2,100 average monthly mentions on the platform, while Innisfree, another skincare brand owned by AmorePacific, leads on Baidu, another Chinese digital service.

Both these brands are also among the top 10 most-searched beauty products on Alibaba's online marketplaces Taobao and Tmall, alongside such established brands as L'Oréal, Chanel and Estée Lauder.

Successful marketing has also helped both brands, especially when they focused on social media platforms, and L2 advised Western brands to adopt their approach when working out their strategy for the Chinese consumer.

"We believe that South Korean brands' digital performance and investments are forward looking indicators of market success," Bailey said. "To compete Western brands should leverage the popularity of South Korean and identify South Korean acquisition targets to add to their portfolios."

Coming just a couple of days after publication of the report, AmorePacific also reaffirmed its commitment to China as it highlighted the opportunities presented by the country's growing middle-class, which is expected to reach 500m by 2020. The company made $4.93bn in sales last year, up 20.1% year-on-year.

Data sourced from Luxury Daily, Inside Retail Asia; additional content by Warc staff