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Companies & industry

Cosmetic subcontracting: Korea wants to export its model more

Given the multitude of cosmetic brands operating in the APEC and especially in Korea and Japan, it seemed logical that a strong industry of outsourcing was due to emerge and thrive in the region during the past years.

A well established industry whose structure and messages - that set the bar very high in terms of quality, sophistication and environmental standards - reflect its importance in the economic system and with regards to the issues at stake in a highly innovation demanding sector. Many Koreans manufacturers have managed to seize this opportunity to create absolute jewels in terms of R & D and manufacturing capabilities. But all of them express the same overall vision in the medium and long term. Faced with Korean and Japanese domestic markets close to saturation, sliders are increasingly switching in the direction of China, and more specifically to sophisticated markets represented by the United States and Europe, in a better position to pay “Made in Korea” products. To exemplify this, we took two companies and not the least, the Kolmar Korea and Cosmax companies.

Kolmar Korea: 38% of the outsourcing market in Korea

Concerning Kolmar Korea, created just over twenty years ago, its scope of activity has continued to grow over the years. So much so that the group headed by Mr. Dong-han Yoon, its founder, can display a consistent business card. With no less than...four production sites, 1,000 employees, a turnover of USD 300 million dollars last year and with 65% of the activity serving the cosmetic sector (with half of it for make-up), 30% for pharmacy and 5% to dietary supplements. A turnover that has literally exploded between 2007 and 2011 with annual growth rates of over 20%; no wonder then that the CEO of the company proudly displays a market share for subcontracting in Korea that he estimated at 38%. When one knows that there are about 400 companies that are assumed to be operating in the same segment in this country of 50 million inhabitants, that’s indeed something to be proud of.

Kolmar’s headquarters in Seoul

Kolmar’s headquarters in Seoul

Kolmar’s history, since its inception in 1990, is marked by both patent filing (99 in total), by the opening of industrial sites and by the obtaining of all the possibly available certificates of compliance (CGMP in 1994, ISO 9001 in 2001, KGMP in 2002, Ecocert in 2009, ISO 22716 in 2011).

As for the manufacturing plants, the two sites specialized in skin care cover an area of nearly 10,000 sqm and offer an annual capacity of 70 million units. Those dedicated to make-up cover more than 6,000 sqm and have a capacity of 60 million units per year for a wide product range (powders, eyeliners, eyeshadows, lipsticks, mascaras etc..). Not to mention the “pharma” unit of more than 20,000 sqm (46 million units) and dietary supplements of more than 5,000 sqm (150 million units). The new plant located in Beijing, more dedicated to skin care and body care, which opened last year “to access the fantastic Chinese market”, according the words of the leaders of Korea Kolmar, covers 7,800 sqm for an annual production capacity of 45 million units.

One of Kolmar’s make-up factory

One of Kolmar’s make-up factory

A commissioning which expresses the desire of the firm to export its know-how outside of Korea. Because the Korean domestic market, where Kolmar has been excelling since its creation and which accounts for 90% of its activity, is almost saturated. Hence for Kolmar, it’s time to turn elsewhere, especially to the U.S., Europe and ... South America.

Cosmax: growth rates of 31% to 36% per year!

The ambitions of the Cosmax company are the same. The business card of the company founded in 1992 is particularly impressive. Over the last five years, its turnover will have recorded a pretty astonishing jump from USD 65 million to 182 million last year! Growth rates of 22%, 31% and even 36% year on year! The company has positioned itself as a total outsourcing company in both the skin care and make-up segment with a 50/50 distribution, which has not changed during this period.

Like any Korean company worthy of the name, the R&D is considered strategic enough for the company to have 27% of its employees working there. The company also highlights its ability to create formulas and boasts that 95% of products are manufactured from them. Of course it can also display a full range of conformity certification (CGMP in 1998, ISO 9001 in 2000, OHSAS 18001 in 2007). But also only exports15% of its production, mainly to Japan and Europe. This has to change...

Skin care, make-up, hair care...

The company owns three manufacturing sites in Korea and soon, two factories in China since the second one will be running next September in Guangzhou on 27,000 sqm. An increase in the production tool that should not stop there since officials at Cosmax are already talking of a fifth factory in Asia in 2013...

Kyung-Soo Lee, Chairman and CEO, Cosmax

Kyung-Soo Lee, Chairman and CEO, Cosmax

In terms of production lines, the capacity is consistent with 22 lines for skin-care (almost 90,000 units/year), 21 for lipsticks (27,600 units/year), 3 for mascaras (9,200 units/year), 26 for powders (about 44,000 units/year).
Its leaders, KS Lee, Chairman, and CH Song, President, also want to deliver a strong message around what they call “the spirit of the three apples.” The first, “Eve’s apple,” the apple of morality. The second, the “Apple of Beauty,” the one which was given to Aphrodite by the Trojan prince. The third, “Newton’s apple of science”, the one that inspired Newton for the development of his theory of universal gravitation. “These three symbols hinged on the apple, explain the leaders, reflect exactly our industrial philosophy based on honesty, on our mission to contribute to a life more beautiful and finally on our goal for research and development.” Quit a program indeed!

Jean-Yves Bourgeois

© 2012 - Premium Beauty News - www.premiumbeautynews.com
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