Cosmetics companies in Korea are looking forward to streamlined central control over industry regulations under the newly elected president.
During his campaign, President Moon Jae-in pledged to create a new plan for the development of the cosmetics industry that would integrate the regulatory and funding authority of various agencies, creating a more cooperative system to help cosmetics companies export to other countries.
Moon previously pledged that he would create a system that would allow companies to “easily check relevant policies and receive support for exports.”
Under the current system, cosmetics companies receive funding and information regarding export processes from the Korean Food and Drug Administration, the Ministry of Health and Welfare and the Ministry of Trade, Industry and Energy.
The dispersed system has not only created extra red tape for companies hoping to take their products abroad, but has also led to mixed information and overlapping funding for research and development.
“The problem until now was that companies were often unaware of the different types of funding available to them from different agencies. Under the new plan, we hope to see a more comprehensive and efficient way of informing companies about the support they are eligible to receive,” said a spokesperson for the Korea Cosmetics Association.
The difficulties faced by exporting cosmetics companies -- particularly small and medium companies that have trouble gaining market share in the saturated domestic market but are seeing opportunities overseas -- in receiving informational and financial support from various agencies are well-known.
According to industry estimates, roughly 80 percent of cosmetics exports come from companies other than powerhouses Amorepacific and LG Household & Health Care, meaning that smaller companies make up the majority of Korean cosmetics exports. However, they have been working with incomplete market information.
“Larger companies are generally better able to keep up with the latest developments in changing regulations and to ensure that their products are exported smoothly,” said one industry insider who asked to remain anonymous. “It’s the smaller companies that are hit the hardest when foreign governments make their inspections stricter, because they are not kept up-to-date on how to deal with these changes.”
In March, the Health Ministry launched a special committee of 40 specialists in the cosmetics industry. Made up of members from businesses, research agencies and academia, the committee is tasked with creating support frameworks and roadmaps regarding research and development, overseas expansions, infrastructure and ecosystems, and policy reforms regarding cosmetics.
According to the Health Ministry, cosmetics production in Korea has grown an average of 13.9 percent annually over the past five years, reaching 10.7 trillion won ($9.48 billion) in 2015. Total exports of products used for beauty or cosmetics purposes grew to about 4.2 billion won last year, according to the KCA.
In addition to a more efficient system for providing government support, smaller cosmetics companies are looking to the new president to facilitate reconciliation between Korea and China following the fallout from the Korean government’s decision to install the American anti-missile Terminal High Altitude Area Defense system here.
The spat led to widespread repercussions for Korean companies doing business in China and was aharsh blow to the cosmetics industry in particular, as its revenues had relied heavily on Chinese shoppers’ enthusiasm for Korean products both overseas and at Korean duty-free shops.
By Won Ho-jung (hjwon@heraldcorp.com)
