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Grace Sung 08/2009
Since early 2000, Korean women have become more receptive to Western products, especially in regards to foreign health and beauty items. As more Korean women enter the labor force and experience rising incomes, they havebecome avid users of imported cosmetics, yielding significant gains for U.S. suppliers. Other tendencies have developed in tandem with the strong continuing expansion of the Korean market for imported cosmetics. As Koreans tend to be more health-conscious, following the ‘wellbeing’ trend, they prefer natural and ‘green’ cosmetics products. Also, since Korean women want to look younger and healthier,functional cosmetics (cosmeceuticals) that focus on anti-aging, whitening, and anti-ultraviolet care have become very popular. Korean men are also becoming significant consumers of cosmetics, providing opportunities for cosmetics companies that feature men’s lines. As the Korean cosmetics market continues to be polarized, with products either focused on the premium end or on the lower-priced,mass-market end, two distinct groups of consumers are becoming target audiences: those shopping at low-cost cosmetics franchise stores and those shopping for very expensive and luxurious cosmetics at department stores. The U.S.- Korea Free Trade Agreement (KORUS FTA) signed by both nations in June 2007 has the potential to bring further advantages for U.S. exporters as Korean tariffs on imported U.S.cosmetics are eliminated over three to ten years. These market trends portend good opportunities for U.S. companies in the years ahead.
The preference of Korean women for imported cosmetics has grown significantly as shown by the increased number of distribution channels, such as online shopping malls, department stores, and home shopping television networks. These retail channels,some non-traditional, have become the prime distribution channels for imported cosmetics products. The Korea Food and Drug Administration (KFDA) has modified some of its pre-existing regulations on cosmeceuticals in an attempt to make the process of importing and testing foreign cosmetics in Korea less time consuming. In conjunction with this, the Korean government also announced that it willincrease the budget to hire more personnel to handle KFDA’s testing and approval process due to the increasing number of cosmeceutical products entering the market. With these changes, the Korean government has demonstrated its willingness to address some of the concerns of cosmetics manufacturers in Korea as well as foreign producers.
In 2008, the entire cosmetics market in Korea wasestimated to be worth about USD 5.9 billion, an increase of three percent over the industry in 2007. Although the market had not increased much, the fact that it did show growth in 2008 shows the cosmetics market remains strong despite the economic recession Korea faced in late 2008. U.S. imports within that year account for 23 percent of the total imports into Korea. Continued growth in thisindustry sector is forecast over the next five years as a result of increased receptivity to Western styles and trends relating to health and beauty products among Korean women and men, leading to an increasing acceptance of imported quality cosmetics.
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Republic of Korea: CosmeticsMarket and Import Procedures Page 2 of 10
(Unit: USD million)
2006 Local Production (excluding Exports) Exports Imports U.S Imports (included in Imports) Total Market 4,189 (KW 4.0 trillion) 305 (KW 290 billion) 602 (KW 572 billion) 146 (KW 139 billion) 5,734 (KW 5.4 trillion)
2007 4,380 (KW 4.4 trillion) 348 (KW 324 billion) 652 (KW 606 billion) 156 (KW 145 billion) 6,392 (KW 6.4...