ITA CODE: COS
Overview
| 2019 | 2020 | 2021 |
Total Local Production | 13,959 | 12,853 | 14,549 |
Total Exports | 6,554 | 7,572 | 9,182 |
Total Imports | 1,637 | 1,168 | 1,305 |
Imports from the US | 309 | 279 | 300 |
Total Market Size | 9,042 | 6,449 | 6,672 |
Exchange Rate 1USD | 1,165 | 1,179.6 | 1,144.6 |
= total local production + imports - exports
Units: $ millions
Source: Ministry of Food & Drug Safety (MFDS)
South Korea is one of the top ten beauty markets in the world in terms of global market share, known for innovation, natural ingredients, and pleasing packaging. For 2021, the total value of cosmetics produced in South Korea recovered to pre-pandemic levels, rebounding by 9.8 percent from the previous year to $14.5 billion and cosmetics exports hit record high growing 21.3 percent from the previous year to $9.2 billion. South Korea was the third largest exporter of cosmetics after France and the United States. South Korea’s trade surplus in the cosmetics sector grew by 28.6 percent to $7.8 billion, remaining in the black for ten consecutive years. Meanwhile, total imports of cosmetics went up from 2020 and were valued at $1.3 billion. On a country-by-country basis, France ($435 million) was the largest exporter to Korea in 2021, followed by the United States ($300 million) and Japan ($129 million).
According to the Korea Customs Service statistics in 2022, skincare cosmetics (HS code 3304.99.1000) continued to be the largest import category representing 41.8 percent, or $711 million of total cosmetic imports. Perfumes and scents (HS code 3303.00.1000) and haircare products (3305.90.2000) accounted for the next largest import categories.
South Korea stands out as the country with the highest smartphone ownership rate/broadband penetration rate and fastest average internet speed. According to the Korean National Statistical Office, cosmetics online shopping transactions valued $8.1 billion in 2022, a 14.6 percent decrease from the previous year. The proportion of online transactions to total cosmetics retail sales last year was 39.4 percent, a slight drop from the previous year as offline transactions recover to the pre-pandemic levels.
Despite post-pandemic reshuffling, South Korea’s e-commerce channels have become an increasingly popular way for consumers to purchase cosmetic products. Domestic online channels have introduced ‘same-day’ and ‘early morning’ delivery services. In addition, cosmetics retailers have long used big data solutions to study customer behavior patterns to identify their needs, create demand for products, and build effective marketing strategies.
“Jikgu” or cross-border e-commerce has also increased over the past three years. The total consumption via cross-border e-commerce in 2022 was $4.7 billion, a 46 percent increase from pre-Covid levels in 2019. According to Korea Customs Agency, thirty-four percent of cross-border e-commerce in South Korea were from the United States in 2022. The most popular foreign sourced products from on-line retailers by Koreans in 2022 were health supplements (16.3%), electronics (13%), coffee/snacks (10%), footwear (5.9%), and cosmetics/perfumes (4.9%).
Leading Sub-Sectors
Clean/Vegan BeautyDerma/Cosmeceutical Cosmetics Hair Loss
Strong potential subsectors for U.S. exports to South Korea include clean/vegan beauty, derma/cosmeceutical cosmetics, and hair loss related products. Most of the key trends among Korean consumers are related to sustainable, eco-friendly, and climate-conscious lifestyles. Hyaluronic acid, collagen, natural/organic, ceramide, probiotics, and peptides ingredients are the focus of attention these days. Microbiome cosmetics that enhance skin immunity have caught the attention of many large beauty and skincare brands.
Regulatory Environment
In South Korea, cosmetics are regulated by the Ministry of Food and Drug Safety (MFDS).
Cosmetics fall under two categories: functional cosmetics and regular cosmetics. Functional cosmetics, which until 2017 comprised of whitening, anti-wrinkle, and sunscreen and tanning products and now includes hair colorants, hair nutrients, and cosmetics that help protect damaged skin. MFDS reviews only functional cosmetics for pre-market approval. For all other regular cosmetics, the MFDS authorized the Korea Pharmaceutical Traders Association (KPTA) to review and certify import permission requests submitted by the Korean importer.
Packaging
In response to the growing pollution problems from the overuse of disposable plastic and delivery packaging used during COVID, Korean cosmetic companies are joining the “Less Plastic” campaign, opting for biodegradable materials and reducing the amount of plastic packaging. Additionally, South Korea implemented the Recycling Act in December 2019, which is applicable and impacts all products available in South Korea including cosmetics. Under the Recycling Act, the usage of plastic materials that are difficult to recycle such as PVC and colored PET bottles have been banned.
Resources
Trade Shows
COSMOBEAUTY SEOUL 2023 (May 25-27, 2023)
As Korea’s most renowned beauty exhibition, COSMOBEAUTY SEOUL 2022 drew 260 companies from seven countries and 14,685 buyers. The show hosted 906 business matchmaking meetings.
InterCHARM Korea (August 30-September 1, 2023)
As the largest B2B beauty platform in Korea, InterCHARM Korea offers international brands the best opportunities to find potential buyers, distributors, and retailers to expand their business in Korea. InterCHARM Korea 2022 drew 25,000 visitors.
Key Contacts
Ministry of Food and Drug Safety (MFDS)Korea Pharmaceutical Traders Association (KPTA)Korea Cosmetic Association (KCA)
Local Contact
U.S. Commercial Service Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 03141, Korea
Tel: 82-2-397-4535
office.seoul@trade.gov