AmorePacific pioneers Asian beauty
AmorePacific Chairman Suk Kyung-bae has fostered the company as one of the major cosmetics companies in the world with his business insight and trend-reading ability. / Courtesy of AmorePacific
Cosmetics giant to triple sales to W12 trillion by 2020
By Park Si-soo
AmorePacific turned 70 this year. The company's growth history seems to run parallel to the history of Korea’s modern cosmetics industry, because when the firm was established in September 1945, there were only a handful of “primitive” beauty and skincare products based on impure herbal oils or other natural materials.
AmorePacific has played a pivotal role in modernizing the nation’s cosmetics industry. Many of its early-stage products were labeled as “Korea’s first,” opening a new horizon and paving the way for cosmetics to become today’s lucrative high-tech business.
Also, it’s not too much to say that the company has played a decisive role in lifting Korean cosmetics’ international profile. A series of innovative products it developed have stirred a sensation and wowed numerous customers across Asia, and are now poised to spill over into the United States and Europe that have taken pride in being the trend-setters of the global beauty market.
That’s a reason why many analysts and market observers here equate AmorePacific’s future to that of Korea’s cosmetics industry.
‘Together, we can’
AmorePacific released ABC pomade, Korea’s first vegetable pomade based on castor oil, in 1951.
Marking the 70th anniversary, the nation’s biggest cosmetics maker last week unveiled its new corporate slogan “Together, we can.”
This highlights the importance of unity of employees and cooperation with suppliers and other business partners, which officials said will make it easier for the company to reach its fundamental goal of being the “Asian beauty creator.”
It also unveiled a set of associated strategies focusing on globalization, digitalization, retail sales, quality of employees and management skills.
“This year marks the 70th anniversary of the company’s foundation. We have taken a rigorous journey only looking at our customers, and finally reached a critical juncture before making a voyage toward the sprawling big ocean,” AmorePacific Chairman Suk Kyung-bae said during an event celebrating the anniversary last week. “Our journey toward our big dream has just begun. We will grow up as ‘great global brand company’ that changes the world with our beauty and health products, and creates Asian beauty that brightens the world.”
He unveiled the firm’s mid-term targets of securing 12 trillion won ($9.95 billion) in sales, a 15 percent operating profit margin and 50 percent of sales generated overseas by 2020. Last year, the company reported 4.71 trillion won in sales with 20 percent, or 832.5 billion won, generated abroad.
Suh’s remarks were widely translated as his declaration that AmorePacific will speed up its global expansion. Many officials and analysts here said Suh has firm commitment to globalization, believing it’s the only way to ensure the firm’s sustainable growth amid fiercer competition on its home turf.
For successful globalization, AmorePacific said it will intensify customer studies and research in China and other Asian countries to deepen its understanding and knowledge there, and develop products that better fit people’s tastes.
The company saw nearly half of its overseas sales in China last year.
It will also step up international promotion of what it called “five global champion brands” ― Sulwhasoo, Laneige, Mamonde, Etude and Innisfree.
The company will try to boost sales in duty free stores and increase the promotion of its brand and products in mega cities, each with more than 10 million citizens, around the globe.
Digitalization is another key mission. The chairman is committed to boosting sales from its website and online shopping malls. On top of this, the company will open multi-language websites for better communication with customers around the globe.
Experts said this plan reflects the sense of urgency the chairman feels in the face of the rapid growth of online shopping that poses an increasing threat to companies relying heavily on offline stores and other conventional sales avenues. AmorePacific’s online sales continue to rise, but still a large portion of its revenue is generated by offline stores and direct sales agents.
But it doesn’t mean the company will expand online outlets at the cost of reducing investment in offline stores. The company said it will increase investment in offline outlets at home and abroad to provide visitors with “differentiated” services.
The company also pledged to introduce high-end personnel management and incubating systems to select and nurture smart and passionate workers who will contribute to the firm’s global expansion.
AmorePacific’s “Cushion” products were a smash hit upon their release in 2008.
History of AmorePacific
Established in September 1945, AmorePacific has maintained an undisputed leadership in Korea for seven decades. Behind the success was the company’s lavish spending on research and development (R&D) and development of innovative products that have changed the landscape of the local cosmetics market.
Many analysts and market insiders gave credit to AmorePacific’s founder Suh Sung-whan, father of the incumbent chairman, who put a high value on R&D.
“Being a world leading company will only be possible when we are superior to rivals in terms of science and technology,” the founder was quoted as saying in AmorePacific’s history book. The founder passed away in 2003.
The founder’s mother, Yun Dok-jeong, also engaged in the cosmetics business, selling self-made herbal oils extracted from camellia flowers in the 1930s.
AmorePacific took the local cosmetics market by storm in 1951 with ABC pomade, the nation’s first vegetable pomade based on castor oil. The product made a big hit due to its better performance in hair setting than chemical pomade that was popular at that time.
AmorePacific took another step forward in 1954 by opening an R&D lab in Seoul. It was the nation’s first R&D lab specializing in beauty and skincare products. It was small, located on the corner of the company’s factory in Huam-dong, northern Seoul, but it played a crucial role in rolling out a series of innovative products.
In 1966, the company released the nation’s first ginseng-based cream, named ABC Cream. In 1989, it extended base materials for beauty products to green tea.
In 1992, AmorePacific opened its main R&D center in Yongin, Gyeonggi Province, where its scientists have developed numerous hit products, including the much-hyped “cushion” products in 2008.
Cushion refers to a make-up compact built with specially-designed urethane foam that safely contains and preserves make-up liquid comprised of foundation, sunscreen and skincare formula. The product has been one of the most popular cosmetics products in Korea for convenience.
AmorePacific continues to expand its R&D facilities as its business goes global.
Who is Suh Kyung-bae?
Born in Seoul in January 1963, Suh studied at Yonsei University in Seoul and Cornell University in the United States. He joined AmorePacific in 1987 and assumed various decision-making positions before being promoted to CEO in 1997. Suh was named chairman of AmorePacific Group in January 2013.
He put the company on the path of rapid growth with his business insight and trend-reading ability. Under his leadership, AmorePacific showed rapid growth in recent years, making it one of the major cosmetics brands in the world.
In June, AmorePacific formed an unprecedented partnership with Christian Dior, under which the Seoul-based company shared cushion-related technology with the French cosmetics giant.