When Suh Kyung-bae, Amorepacific Group chairman, inherited the family business 20 years ago, the cosmetic firm was teetering due to low demand and financial rigidity.
Not only was the country suffering from the Asian financial crisis at the time, but the local beauty industry as a whole was facing a wave of foreign cosmetics that poured in after the government completely lifted a ban on imports.
Amorepacific Group Chairman Suh Kyung-bae (Amorepacific)
The second-generation chaebol scion could have abandoned the cosmetic arm of the company and pursued non-beauty and emerging sectors, such as IT and fashion instead.
Suh, however, made a daring choice, to keep the legacy of Amorepacific, which started from his grandmother’s kitchen where camellia hair oil was made. He carried out massive restructuring of the company by selling its non-cosmetic units. The decision worked well, probably even better than what many, including himself, had expected at that time. Last Saturday, Suh celebrated the 20th anniversary since he began heading the company.
Over the years, Amorepacific has introduced a list of popular brands including IOPE, Sulwhasoo, Laneige, and Innisfree, turning the initially domestic-focused firm into a cosmetics powerhouse in Asia.
They became a market success not only in Korea but also in China, as their products were based on intensive scientific research on Asian skin. The Korean company also rediscovered the aesthetic value of Asian beauty and its perseverance in a market that has long been dominated by western values on beauty. The business also grew with the popularity of the Korean wave or Hallyu, cashing in on the image of Korean celebrities.
In terms of numbers, Amorepacific’s revenue has surged 10 times from 646.2 billion won ($576.9 million) to 6.69 trillion won, with an operating profit of 1.08 trillion won from 52.2 billion won, a 21 times increase.
Last year, Amorepacific was ranked the 12th cosmetic firm worldwide by Women’s Wear Daily. The company shipped 1.69 trillion won worth of products overseas in 2016, a 181 times increase from 9.4 billion won in 1996. Amorepacific currently has 19 overseas office in 14 countries, operating 3,200 stores.
When compared with tech giants such as Samsung Electronics which produces around 350 trillion won a year, the size of Amorepacific’s business is substantially smaller. But in terms of what the company has done to improve South Korea’s brand competitiveness, Amorepacific excels, said Jeong Seon-sub, president of Chaebul.com, a corporate tracking firm in Seoul, in a previous interview.
The rapid growth of the company has also brought tremendous fortune for its chairman.
Suh, 54, owns 56 percent of Amorepacific Group, the holding company, and another 11 percent in Amorepacific Corp., an anchor of the group. As the largest shareholder of the group, he is the second-richest man in South Korea, after Samsung Chairman Lee Kun-hee.
Looking back, Suh said Monday that the crisis he faced 20 years ago was also an opportunity. He continues the mission of spreading Asian beauty around the world by overcoming the difficulties of today.
“By inheriting the spirit of the founders who dreamed of (producing cosmetics) that go beyond the pacific, let us overcome many difficulties of the present time and continue our efforts in (offering) beauty and health to people around the world,” the chairman said.
Despite its thriving business, Amorepacific has come under the impact of the Chinese government’s apparent economic retaliation against the deployment of an US anti-missile defense system in South Korea. The cosmetic firm exports nearly 70 percent of its shipments to China and Hong Kong.
To diversify its global business portfolio, the company aims to expand its presence in Southeast Asian countries, the Middle East and the US.
Setting his next goal as becoming a “great company,” Suh vowed to seek sustainability in management and expand corporate social responsibility programs around the world.
Amorepacific plans to have green features in more than 40 percent of its new products and promote itself as a company with environmental awareness and which supports women’s rights, the company said.