How South Korea drives Asia’s love affair with cosmetics

Editor’s Note: Virtual Think Tank is a digital series focusing on the emerging markets, covering their startups, the power of the middle classes on their economies and the macro environment.

Story highlights

In China, cosmetics now outstrips groceries as the biggest selling item in its department stores

In 2013, Chinese women, and increasingly men, spent 162.5 billion yuan ($26 billion) on cosmetics

Japan's annual beauty and personal care market is still the largest in the region at about $50bn

But China's 150 million-strong middle class is closing the gap fast and its focus is increasingly South Korea

CNN  — 

The cosmetics section of any department store anywhere in the world might usually be the first thing you encounter when you walk through the door, but in China it’s often a mirror maze on a vast and dazzling scale.

There are serried ranks of demonstrations as shop assistants jostle for attention armed with French moisturizers, South Korean all-in-one BB creams and Japanese lip glosses and violet eye shadows.

If department stores in Asia are the battle ground for its emerging middle classes, then the cosmetics counter is its front line.

Big demand

In China, cosmetics now outstrips groceries as the biggest selling item in its department stores, according to a report from Fung Business Intelligence Center.

In 2013, Chinese women, and increasingly men, spent 162.5 billion yuan ($26 billion) on cosmetics in an industry that showed 13.3% growth year-on-year, according to the same report citing figures from Euromonitor International.

Japan’s annual beauty and personal care market is still the largest in the region at about $50 billion, second in the world only to the United States (which is about $70 billion), according to Euromonitor International.

But China’s 150 million-strong middle class is closing the gap fast.

For them, however, ground zero in terms of models of beauty is increasingly South Korea.

While South Korea’s domestic market is only a third the size of China, in terms of soft power the country punches well above its weight thanks to Asia’s insatiable appetite for Korean drama series and their stars.

China’s middle class is expected to grow to 500 million within a decade. By 2030 around one billion people in China could be middle class – as much as 70% of its projected population, according to a report from EY.

In terms of brands, according to Euromonitor, L’Oréal China continued to hold the leading position in the Chinese cosmetics market in 2013 with a value share of 34%.

And while South Korean brands might be little known outside the region, thanks to the popularity of K-pop and Korean soap operas – whose stars such as Song Hye-kyo and Kim Hyun-joong and Yoona of Girls’ Generation are household names in the Asia-Pacific region – Korean beauty brands are now the hottest ticket item in China.

Michelle Phan on South Korea

Michelle Phan on South Korean cosmetics

  • For make-up guru Michelle Phan, an American entrepreneur and YouTube celebrity, South Korea holds a special attraction for the Asian market.
  • “In South Korea I was so well received,” Phan told CNN. “The followers are very passionate; one girl even waited outside my hotel for nine hours.
  • “People in Korea want good skin care and less make-up and, on average, a Korean woman will use about nine skincare products a night.”
  • For cosmetic companies, there’s no shortage of variation in the Asian market, with each country preferring its own distinctive look.
  • “Beauty standards in Asia are completely different,” Phan said. “They prefer porcelain flawless skin to the kind of bronze beauty preferred in the West – the philosophy is that if you’ve got good skin you don’t need a lot of make-up.
  • “Brands in each region reflect these priorities. In Japan, they prefer a more eccentric look; doll-like faces, color contacts and fake eyelashes. In South Korea, a more natural look is preferred while in Thailand, full straight brows are preferred with a pop of lip color.”

    Star power