K-cosmetics industry sees rising closures amid global success

A visitor examines beauty products at MyK FESTA 2025 held at the SK Olympic Handball Gymnasium inside Olympic Park in Seoul, June 19. Yonhap

Despite the global popularity of Korean beauty products, many cosmetic firms in Korea are, by contrast, going out of business, mainly due to a lack of sustained market competitiveness, which requires technological breakthroughs and stable revenue.

According to the Ministry of Food and Drug Safety, 8,831 registered beauty product sellers closed their businesses last year — the highest number recorded in the past six years. In 2019, only 707 closed, but the figure has steadily increased since, surpassing 1,000 in 2021 and jumping to 3,258 in 2023.

In the past six years, the largest number of shutdowns occurred between 2023 and 2024. This period coincides with the time when Korean beauty products began gaining global buzz for their quality and affordability. Last year, the number of registered beauty businesses nearly doubled from 15,700 in 2019 to 27,900.

Experts note that, compared to other industries, cosmetics require relatively low manufacturing costs, making it easier for new businesses to enter the market with modest capital. On average, the cost breakdown per product includes 10 won ($0.01) to 100 won for the content per gram, 500 won to 1,000 won for the container and additional costs for final packaging — totaling around 3,000 won per item. This is significantly lower than in other retail sectors such as food, pharmaceuticals or electronics.

Korea’s original design manufacturing companies — including major players like Cosmax and Kolmar Korea — have also played a key role in lowering entry barriers by enabling startups that lack in-house production facilities.

These leading firms have recently expanded their global presence, with their technology and product quality gaining international recognition. As a result, many small and medium-sized enterprises now focus on brand building and marketing, while outsourcing production to original design manufacturing companies.

However, without meaningful investment in research and development, companies cannot survive for long, as they lack a technological edge and rely solely on brand marketing, experts say.

A lack of competitiveness in beauty products has led some major Korean companies to experience declining sales. Coway, a drinking water dispenser and home appliance maker, launched the beauty brand Re:NK in 2010. The brand’s sales dropped from a peak of 83.1 billion won in 2015 to 23.4 billion won in 2023. In 2023, Re:NK accounted for just 0.6 percent of Coway’s total sales, fueling speculation that the company may soon sell off the division.

Other home appliance makers Kyowon and Woogjin also launched their own beauty brands in 2017 and 2010, respectively, but their recent sales have shown no significant growth.

Still, major companies continue to enter the beauty industry. Education platform operator i-Scream Media added a beauty business to its portfolio in March. Home appliance maker Cuckoo Electronics followed suit that same month.

Despite the challenges faced by many firms, the overall industry continues to grow robustly, driven by strong demand both domestically and overseas.

The country’s beauty industry logged record performance last year, according to the ministry. Manufactured value reached 17.5 trillion won and exports hit $10.2 billion, year-on-year increases of 20.9 percent and 20.3 percent, respectively.

Korea’s beauty exports ranked third in the world, following France with $23.3 billion and the United States with $11.2 billion. Among Korean exports, small and medium-sized businesses contributed $6.8 billion, accounting for 66.4 percent.