ITA CODE: COS

Overview

Total market size = total local production + imports - exports
Units: $ millions

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

South Korea is one of the top 10 beauty markets in the world, known for innovation, gentle ingredients, and pleasing packaging.  In 2020, the market size was estimated to be $6.8 billion, a significant drop from the previous year’s $9.4 billion due to impacts of COVID-19.  Despite the overall recession in the domestic beauty industry, the total export of K-beauty products and the balance of trade have increased approximately 16 percent and 14 percent respectively from the previous year.  Meanwhile, total imports of cosmetics in 2020 went down 2.8 percent from 2019 and was valued at $1.1 billion.  On a country-by-country basis, France ($433 million) was the largest exporter to Korea in 2020, followed by the U.S. ($337 million) and Japan ($161 million).

According to the Korea Customs Service statistics, in 2021, skincare cosmetics (HS code 3304.99.1000) continued to be the largest import category representing 34.17 percent, or $560 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 stood at $9.6 billion in 2021, a 1.6 percent decrease from the previous year.  The proportion of online transactions to total cosmetics retail sales last year was 35.7 percent, a 6.7 percent drop from the previous year.  Despite slowdowns in domestic cosmetic consumption post Covid-19, South Korea’s e-commerce channels have become an increasingly popular way for consumers to purchase cosmetic products.

“Jikgu” or cross-border e-commerce has increased dramatically over the past three years of the pandemic.  The total consumption via cross-border e-commerce in 2021 was valued at $4 billion, a 40.7 percent increase from pre-Covid in 2019.  Cross-border e-commerce of cosmetics reached $193 million in 2021, a 27.5 percent increase from 2019.  Purchases from the United States ($77.9 million) made up 36.1 percent of the total cross-border e-commerce of cosmetics in 2021.

Leading Sub-Sectors

• Clean/Vegan Beauty
• Derma Cosmetics
• Organic/Natural cosmetics

Strong potential subsectors for U.S. exports to South Korea include clean/vegan beauty cosmetics, derma cosmetics, and organic/natural cosmetics.  Most of the key trends among Korean consumers are related to sustainable, eco-friendly, and climate-conscious lifestyles.  Microbiome cosmetics that enhance skin immunity have caught the attention of many large beauty and skincare brands.  In addition, the beauty tech market that combines cosmetics and IT technology is rapidly growing.  Amore Pacific, the leading cosmetics conglomerate in Korea, has partnered with Perfect, the AI/AR beautytech solution company to implement an AI beauty solution for AR makeup and AI skin analysis. When it comes to packaging, reducing plastic has become a major initiative for the cosmetic industry, with the growing problem of plastic pollution due to the overuse of plastic in disposables and delivery packaging post COVID-19.  In response, more cosmetics companies are joining the “Less Plastic” campaign, opting for biodegradable materials and reducing the amount of plastic packaging.

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.

Prohibited Ingredients

The MFDS has notified about 1040 ‘prohibited ingredients’ on the basis of negative list system, thus all ingredients except prohibited ingredients can be used under the Cosmetics Responsible Person’s safety responsibility. 

For the preservatives, UV-filters, and colorants, only the ingredients notified by the MFDS can be used.  On April 1, 2022, the MFDS implemented the revised cosmetics safety regulation including Tetrahydrocannabinol (THC) and Cannabidiol (CBD) guidance.  For THC and CBD which were unintentionally included in the ingredients of Cannabis Sativa Seed Extract and Cannabis Sativa Seed Oil, the standards prescribed in “Standards and Specification for Foods” shall be applied to the cosmetics as below:

• δ-9-Tetrahydrocannabinol (THC) and Cannabidiol (CBD)
  • Cannabis Sativa Seed: THC 5 mg/kg or below; CBD 10 mg/kg or below
  • Cannabis Sativa Seed Oil: THC 10mg/kg or below; CBD 20mg/kg or below

Resources

Trade Shows

COSMOBEAUTY SEOUL 2022 (May 26-28, 2022)

• As Korea’s most renowned beauty exhibition, COSMOBEAUTY SEOUL 2021 drew 204 companies from 7 countries and 4,744 buyers. The show hosted 597 online and offline matchmaking meetings – the total contract volume consisted of $1.3 million.

InterCHARM Korea (September 21-23, 2022)

• 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 is expected to draw 400 exhibitors and up to 600 stands.

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

https://www.trade.gov/south-korea