Melissa Juried Kriebel
South Korean beauty industry giant, Amorepacific, has turned to the North American market and achieved remarkable results after drawing itself out of a downturn in the Chinese market.
Amorepacific said on July 21 that the company reaped its biggest benefits from Prime Day, the largest annual discount sales event for members of Amazon’s paid services that was held July 12-13, Korean news media reported.
Since the beginning of this year, Amorepacific has focused on developing its online and offline sales channels in the United States, spearheaded by its major brands such as Laneige, Sulwhasoo, and Innisfree.
Laneige led the pack in the beauty and personal care category during Prime Day and was also selected as the best-selling brand, and Sulwhasoo sold out of all the products prepared for the event.
In March and April, Sulwhasoo and Laneige were officially launched on Amazon, expanding their online sales reach. In addition, Sulwhasoo entered 51 Sephora stores in March, and Innisfree has also expanded in Sephora and Kohl’s to more than 490 stores.
In North America, Amorepacific’s sales increased by 60 percent in the first quarter from the same period in 2021.
China Market Problems
South Korean cosmetics relied heavily on the Chinese market in past years, with Amorepacific’s share of cosmetics sales in China making up about 70 percent of all overseas sales.
However, Amorepacific had been losing its share of the Chinese market since 2017 when Beijing imposed economic retaliations on South Korea for its deployment of the U.S.-made Terminal High Altitude Area Defense or THAAD anti-ballistic missile systems.
Meanwhile, Sulwhasoo and IOPE Air Cushion foundation were eyed as main targets for copycats in China, while local brands also had more attention with their low-price advantages.
In addition, the Chinese Communist Party’s lengthy Zero-COVID policy has weakened the country’s economy and added to the plight of foreign companies.
In response, Amorepacific has drastically cut back on its brand stores in China. When it was all the rage in the Chinese market, Amorepacific had a peak of over 1,280 stores as of 2019, before the COVID outbreak, The Korea Herald reported on Dec. 16, 2021.
In 2021, Amorepacific’s Innisfree stores in China shrunk from 610 to 280 and will be reduced to only 140 this year. Amorepacific’s other brands Etude House, HERA, and IOPE shut down all of their offline stores in China last year, the Chosun Ilbo reported on Dec. 15, 2021.
Amorepacific’s overseas division reported a 6.1 percent drop in revenue and a 19.5 percent decrease in operating profit for the first quarter of this year, driven by a sales decline in China. according to Korean news media mk.co.kr on April 28.
Asia was the slowest growing region in terms of revenue, with China’s revenue declining by approximately 10 percent in the October-December quarter last year, according to Amorepacific’s 2021 financial report.