Abstract.
K-beauty industry holds a significant position in the fashion world. Yet, its development history spans less than a century. How did the Korean beauty industry flourish within such a short span of time? What is the K-Beauty trends in the future? Today, let’s delve into the developmental history of the Korean beauty industry against the backdrop of the “Miracle on the Han River” era.
First Of Many: Reconstruction In The 1950s Post-War Era
As a nation that emerged post-World War II, South Korea bore the scars of war’s devastation. Hindered by the policy during Japan’s colonial rule, Korea’s industrial foundation was notably fragile. In this era, the Korean government opted to support the development of light industries while prioritizing heavy industries. It was within this backdrop that Amorepacific was established and introduced their inaugural beauty product: the Melody Cream, marking Korea’s maiden branded product in the beauty industry. The positive market reception of this cream highlighted a crucial realization – post-war reconstruction wasn’t solely about infrastructure and economy but also reconstruction people’s aspirations and confidence for a better life.
Miracle On The Han River: 1960s-1980s
Few were the emerging nations that rose from the ashes after the war, and among them, South Korea stands as only one transform from ruins to a developed nation. However, at that time, South Korea had a per capita GDP of only $158. The cosmetics market in Korea had long been dominated by foreign brands. How did they manage to achieve this?
Support From The Government
- Export-led: This initiative learned from Japan’s strategy where the nation encouraged exports through measures like tariff reductions and export subsidies, paving the way for the beauty industry to explore overseas markets.
- Light industry support policy: Because South Korea’s industrial capacity was concentrated in light industries, the beauty sector became one of the industries receiving government backing.
- Support private enterprises: Private enterprises possess greater creativity and flexibility, and government support for these businesses has led to the emergence of numerous renowned brands within South Korea’s beauty industry, like LG; amore.
As a result, the economy began to grow rapidly. The development in the economy led to a shift in perspectives. Which, in turn, brought about new lifestyles. By the 1970s, the concept of sun protection in summers and moisture retention in winters began to gain popularity in South Korea. At that time, the now well-known LG H&H was named Lucky Corporation. And was making significant strides in the cosmetics industry alongside Amorepacific. By the early 1980s, the cosmetics market in Korea had surged to 220 billion Korean won.
Effort Form The Enterprise
Meanwhile, South Korea had already birthed numerous renowned beauty brands like Sulwhasoo, Hera, Laneige, and others. To conquer the domestic market, Amorepacific initiated a marketing approach through door-to-door sales. In the previous century, with relatively low urbanization rates, this strategy swiftly built brand images and secured market shares. Door-to-door sales facilitated direct customer engagement, establishing channels for high-value client communication, thus elevating the product’s prestige.
To overcoming the marketing triangle impossible in theory (simultaneously offering low prices, novel styles, and a wide array of products), LG H&H employed product localization by introducing series like lipsticks, shampoos, sunscreens, and more. Rich product series and fast iterative product ideas. Rander these local companies quickly occupied the domestic market of South Korea.
Throughout the 1980s, South Korea’s economy flourished. The Seoul Olympics showcased the nation’s prowess, while trendy cosmetics continually challenged people’s fashion concept. Concurrently, the consumer market segmented further, witnessing demands and products for various specialized areas like skin whitening and anti-aging. The cosmetics industry experienced a staggering CAGR of 18%. It seemed like everything was progressing positively—a prosperity resembling an endless, life-altering dream. However, prosperity always comes with a price. In the upcoming 1990s, A harbinger of economic crisis will come like a thief in the night.
Black Swan Emerges: Crises And Challenges In The 1990s
By the 1990s, as urbanization surged, dedicated cosmetics stores replaced the once-prevailing door-to-door sales approach. Despite experiencing the Miracle on the Han River, some major corporations persisted in expansion through indebtedness. The nation was swept by a wave of entrepreneurial fervor, leading to the emergence of numerous small private enterprises. By the prelude to the 1997 Asian Financial Crisis, Amorepacific’s debt ratio had soared to 70%. Simultaneously, the government eased restrictions on foreign investment, allowing international brands like L’Oréal to enter the Korean market in the 1990s.
After the economic crisis, South Korea’s GDP plummeted by 38%, prompting the IMF to take control of the nation’s finances and economy. The influx of foreign investment led to the closure of numerous small and medium-sized enterprises. Market shares of South Korean indigenous cosmetic brands witnessed a sharp decline, as demand for cosmetics continued to veer towards cheaper alternatives.
The crisis was indeed daunting, yet more crucially, those who had undergone post-war reconstruction had already cultivated confidence in shaping their future lives. So, how did they forge K-Beauty?
Y2K And K-Beauty: Paradigm Shift
Sometimes, the solution to a problem doesn’t lie within the problem itself but in the ability to integrate across diverse domains. For South Korea, which weathered the financial storm, there was an urgent need for a paradigm shift to discover new economic growth drivers.
At the turn of the Y2K(year of 2000s), the South Korean government vigorously supported the development of its cultural industry:
- Policy Support: The government formulated policies for cultural industry development, providing funding and enacting regulations to steer its growth. In 2000, the government’s fiscal budget for the cultural industry surpassed 1% of the total budget for the first time.
- Industry Support: Comprehensive support was extended across various sectors such as television dramas, music, cosmetics, entertainment, fostering mutual development among these industries. Even today, these contents continue to thrive.
- Cultural Export: The booming cultural industry gained global acclaim, gradually bolstering South Korea’s confidence in its native culture. The beauty industry found new inspiration within tradition.
As a result, various emerging beauty brands began to rise, marking the official arrival of the K-Beauty era. LG H&H introduced the high-end Whoo series, blending Korea’s traditional royal culture with modern technology, allowing the world to experience the beauty of the East. Concurrently, K-Beauty emphasized the natural attributes of its ingredients, targeting adaptability for various sensitive skin types.
Rowell’s Vision
Following this k-beauty trend, we launched a lotion bottle crafted from glass, combining traditional design aesthetics. The exterior of this bottle is covered in a golden mesh-like structure, and the glass material doesn’t undergo any chemical reactions. We can customize it in a darker amber glass, better preserving the natural ingredients of cosmetics. If you are managed a cosmetic business, also please try our cream jar. This is same product series with lotion bottle and also can be customized.
End
Faced with the arrival of a black swan event, what we need is the courage to undergo a paradigm shift, even amidst the uncertainties looming over our future. The future trends of K-Beauty are destined to endure continual scrutiny in overseas markets. While the wave of overseas acquisitions initiated by South Korean cosmetics in the 2010s still holds sway, can the amalgamation of tradition and technology withstand the market’s test in perpetuity? Perhaps the answer mirrors the industry’s evolution throughout history—despite myriad challenges, people will never abandon their yearning for a better life.