Korea’s beauty boom

Korean cosmetics companies may be small fry compared with multinationals, but they have been profiting nicely from a growing interest in Korean culture across Asia, says Alex Williams.

Face creams made from snail slime, sea-kelp and starfish extract may sound unappealing, but they are big business for Korean firms in the unending quest to fight frown lines, enlarged pores and uneven skin tone. Makeup based on the unlikeliest of ingredients has become a boom market for companies such as AmorePacific as they spread their products across China and the US and their shares are rocketing in response.

Perhaps surprisingly, cosmetics firms usually do well when the economy is shaky, says Andrea Felsted on Bloomberg Gadfly. "Women facing an uncertain environment turn to beauty products as an affordable indulgence." However, Western firms are grappling with falling footfall in department stores in the US and UK. Large stores are typically the biggest direct buyers of cosmetics products, but many are closing down, dampening sales growth for Western makeup giants, including Este Lauder. It's a similar story for Japan's Shiseido, the leading Asian player in the industry, which is seeing sliding market share, lower margins and higher advertising costs. A new chief executive is trying to implement a turnaround, but the firm's shares have been sliding.

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