AmorePacific to expand its ASEAN market in Indonesia

AmorePacific President Bae Dong-hyun, right, shakes hands with MAP Group CEO Virendra Sharma after signing a business partnership at the MAP headquarters in Jakarta, Indonesia, last Wednesday. / Courtesy of AmorePacific

By Kim Jae-heun

AmorePacific is aiming to reduce its reliance on the Chinese market by reaching out to the Association of South East Asian Nations (ASEAN) countries.

The country's No.1 cosmetics maker signed a business partnership with Indonesia's largest retailer PT Mitra Adiperkasa, Tbk (MAP) to open its in-house brands across the nation.

MAP Group owns operating rights for global distribution companies such as SOGO, Galeries Lafayette, Sephora and other popular brands including Starbucks and Zara. It currently operates 2,300 stores in 70 cities in Indonesia, the largest economy in the ASEAN bloc.

Since AmorePacific established its Indonesian subsidiary in Jakarta in 2013, it launched four more of its brands Sulwhasoo, Laneige, Mamonde and Innisfree in the capital city.

However, the cosmetics firm expects the new business deal with MAP will further branch out to local customers in various provinces cities, including Denpasar, Surabaya and Bandung.

“We are happy to sign a partnership with MAP, the largest retailer in Indonesia, where we see big potential,” AmorePcific President Bae Dong-hyun said. “MAP's expertise in distribution and AmorePacific's global brand will create synergy to provide top quality products and services to Indonesian customers.”

Indonesia is one of the AmorePacific's key clients in ASEAN among six including Singapore, Malaysia, Thailand, Vietnam and the Philippines.

The cosmetic firm sees Indonesia as having the biggest potential, as it is home to the world's fourth largest population. In 2018, the cosmetics market in Indonesia was estimated at 6.48 trillion won (US$5.45 billion). The market is currently growing at a rapid pace, with the industry predicted to grow to 11.45 trillion won (US$9.64 billion) by 2023.

AmorePacific aims to achieve 500 billion won of sales in ASEAN market by 2023 by focusing more on the Indonesian market.

“We are not expecting to see skyrocketing sales in Indonesia in a short period of time. The market is not big but we are investing in the potentiality there,” an AmorePacific official said. “We are developing our brand and strategy there. “Our main target in the Indonesian market is millennials. Although, it already has a large population, it's still growing. Our research shows there are about 40 million young women there and they have great interest in beauty products.”

According to the company, young Indonesian customers prefer to shop at offline stores and the distribution system is well established across the nation.

“The retail business is still growing big there and MAP is at the center of it. If we had focused on customers in Jakarta only, we want to open our brands stores in every offline platform operated by MAP within this year,” an AmorePacific Official said.

Currently, the cosmetics firm has its Asia-Pacific headquarters in Singapore, which is the most important branch among those in ASEAN countries.

There is a research center studying markets and working out on a strategy specialized for individual countries to successfully localize the brand.

Last year, AmorePacific's entire overseas sales reached 1.97 trillion won. However, it turned out that 90 percent of the revenue came from China. Moreover, the cosmetics firm has conceded its top position in the sales of foreign cosmetics brands to a Japanese company in China last year.