South Korea - Country Commercial Guide
Cosmetics

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-08-13

ITA CODE: COS

Overview

Cosmetics Market  Data: 2016-2019

 

2016

2017

2018

2019

Total Market Size

8,129

8,754

9,370

9,432

Total Local Production

11,241

11,950

13,966

13,959

Total Exports

4,192

4,372

6,223

5,600

Total Imports

Import from the U.S.

1,080

1,176

1,627

1,073

398

378

380

360

Exchange Rate:             W1,161 (2016); W1,131 (2017); W1,110 (2018); W1,165 (2019)  

Sources:                          Ministry of Food & Drug Safety (MFDS); Korea Cosmetic Association (KCA)

Unit:                                 $ million

Total market size:           Total local production – total exports + total imports

South Korea is one of the top 10 beauty markets in the world, representing nearly 2.8 percent of the global market.  In 2019, the market size was estimated to be $9.4 billion; the total local production and total exports increased approximately 4.9 percent and 4.2 percent respectively from the previous year.  The market has grown by an annual growth rate of 4.3 percent for the last 5 years (2015-2019).

Meanwhile, total imports of cosmetics in 2019 went down 3.1 percent from 2018 and was valued at $1.1 billion.  U.S. imports accounted for 22.8 percent of the total import market share, at $360 million.  On a country-by-country basis, France ($462 million) was the largest exporter to Korea in 2019, followed by the U.S. ($360 million) and Japan ($207 million).

According to the Korea Customs Service statistics, in 2020, skincare cosmetics continued to be the largest import category representing 33.6 percent, or $497 million of total cosmetic imports.  Perfumes and scents (HS code 3303.00.1000 at 13 percent) and haircare products (3305.90.2000 at 7.7 percent) accounted for the next largest import categories.

Distribution Channels  

South Korea stands out as the country with the highest smartphone ownership rate/broadband penetration rate and fastest average internet speed.  In addition, restrictions on physical movement under the COVID-19 pandemic have forced a shift in spending from offline to online platforms.  According to the Korean National Statistical Office, cosmetics online shopping transactions stood at $10.6 billion in 2020.  The proportion of online transactions to total cosmetics retail sales last year was 43.8 percent, which means that more than 4 out of 10 Korean consumers bought cosmetics online.  South Korea’s e-commerce channels are not only becoming an increasingly popular way for consumers to purchase cosmetic products, e-commerce sales methods are also evolving.  Among them, “live commerce”, a term used to describe the combination of streaming video and e-commerce.  This service has considerable advantages and competitiveness in that it brings consumers one step closer to the in-person experience while still being online.  In addition, the domestic cosmetics industry is actively using social network services (SNS) as a key tool in the business process, from the development stage of the product to sales and customer inflow.    

Best Prospects/Services

  • Cosmeceutical/derma cosmetics
  • Multi-functional products
  • Organic/natural cosmetics

Opportunities and Challenges

Strong potential subsectors for U.S. exports to South Korea include cosmeceuticals and derma-cosmetics.  Cosmeceutical is a cosmetic that has or claims to have medicinal properties, for example – a product with anti-aging property may be classified as a cosmeceutical.  The domestic derma cosmetics market, which was about $442 million in 2017, experienced a rapid growth every year and in 2019, reached $1 billion.  Currently, the hottest trends are products that claim anti-pollution, anti-aging, and antioxidants related technologies.  In addition, microbiome cosmetics that enhance skin immunity have caught the attention of many large beauty and skincare brands.  When it comes to ingredients, natural/organic/stem cells/probiotics, and peptides ingredients are the focus of attention these days.

Two South Korean companies, Amore Pacific and LG Household and Healthcare, dominate the local production market.  In addition, Korean consumers are purchasing more products directly from overseas markets.  Customers can now buy foreign brands at the same prices as in the U.S., and an increasing number of brands are offering overseas shipping services.  In 2020, overseas direct purchases represented more than $3.7 billion, up 19.4 percent from the previous year.  Dietary supplements (23%), apparel (16%), electronics (14%), food (9%), and cosmetics (9%) are very popular among overseas online Korean buyers. 

New Trends 

In March 2020, the South Korean government introduced the world’s first customized cosmetics system, which mixes cosmetics at cosmetics stores according to individual skin condition and preference.  For example, a local cosmetics flagship store now offers a tailored 3D mask and serum.  The skincare product utilizes a smartphone app, which measures the customer’s facial dimensions, generates a skin diagnosis, and sends the information to a special 3D printer, which then prints a hydrogel facial mask that is tailored to the user’s face shape and skin conditions. A tailored serum is prepared on the spot by mixing the optimal ingredients for the customers’ skin type and problems. 

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. 

Also, 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 2021

COSMOBEAUTY SEOUL focuses on Korea’s latest beauty trends and is becoming known as Korea’s most renowned beauty exhibition. COSMOBEAUTY SEOUL 2019 drew 373 exhibitors from 14 countries and more than 52,000 visitors including manufacturers, distributors, wholesalers, agents, retailers, press, and public. 

Key Contacts

  • Ministry of Food and Drug Safety (MFDS):
  • Korea Pharmaceutical Traders Association (KPTA)
  • Korea Cosmetic Association (KCA)

Local Contact

Ms. Heesook Baik
Commercial Specialist   
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 03141, Korea
Tel: 82-2-397-4172
heesook.baik@trade.gov
https://www.trade.gov/south-korea