LG H&H pivots to N. America to offset falling China sales

The Korea Times

The Korea Times

Business

Thu, November 30, 2023 | 17:48

Companies

LG H&H pivots to N. America to offset falling China sales

Posted : 2022-04-21 17:13

Updated : 2022-04-21 20:05

LG H&H CEO Cha Suk-yong / Courtesy of LG H&H

By Kim Jae-heun

LG Household & Health Care (LG H&H) is shifting its focus to the North American cosmetics market to diversify its business portfolio, while cutting its heavy reliance on the Chinese market, with which it grew explosively until last year, according to company officials, Thursday.

The company said it acquired the U.S cosmetics brand The Creme Shop to target customers in their teens and 20s in the United States. The Creme Shop has averaged 30 percent growth with its cosmetics business in the last three years, riding on the popularity of K-beauty.

The Creme Shop, a mid-priced cosmetics brand founded by a Korean American, gained popularity through its collaborative products with BTS, Hello Kitty and Disney characters.

In May 2020, LG H&H also acquired a business license to sell Physiogel in North America and Asia.

"LG H&H CEO Cha Suk-yong said in his New Year address this year that the company aims to become a global cosmetics firm by expanding its business in North America, the largest market where the trends are created," an official working at a local cosmetics firm said. "As local firms struggle to make a turnaround in the Chinese market, where so many local companies have been biting into their market shares, Cha decided to turn his eyes on the North America market."

The Chinese market accounted for 16 percent of LG H&H's total sales. If the company adds revenue created by Chinese duty-free customers, the ratio increases to 38 percent. This has worried many industry watchers, who argued that LG H&H should cut its heavy reliance on the Chinese market.

Since 2020, LG H&H has been watching its sales decline in China due to emerging new local brands that took away nearly 30 percent of the medium-low-priced cosmetics market there.

Product lineup of LG H&H's premium cosmetics brand The History of Whoo / Courtesy of LG H&H

However, LG H&H's premium The History of Whoo brand is still showing decent performance in China, and the company wants to stay active in the lucrative market in the long term.

"There are negative outlooks predicted for our business in China but it is still an important market for us. We will continue to introduce our new high-end brand products there while expanding our cosmetics business in North America," an LG H&H official said.

jhkim@koreatimes.co.kr