Analysis of Crisis in K-beauty (Korean Cosmetics) and Response Plan: Focusing on China and Southeast Asia

Abstract

This study attempted to i) investigate the causes of the crisis in K-beauty and the current situation, ii) seek a response plan through individualized strategies and competitiveness improvement, iii) assess the adequacy of domestic regulations, laws, and systems, which could weaken the export of makeup products, and iv) develop an improvement plan, focusing on the Chinese and Southeast Asian markets. In terms of the research method, an in-depth interview was performed among export managers from small & mid-sized enterprises as well as big businesses. In addition, literature and records, including objective statistics, industry analysis report, and policy data were analyzed. K-beauty’s popularity had declined sharply since it’s golden days. In fact, it hasn’t been able to find any solution to this issue in the Southeast Asian or Chinese markets, experiencing a dramatic decrease in sales and negative growth rates. As a way to overcome this crisis, the development of an individualized response strategy depending on the cause of the decreased competitiveness of K-beauty is required. Furthermore, it is necessary to have a plan to localize specialized cosmetics such as, natural, functional, bio, and all-in-one products, which can generate synergistic effects between the excellence of K-beauty and the propensities of the new generation abroad. Also, the cosmetics export policy authority needs to upgrade its regulatory policies to international levels in order to enhance the competitiveness of the domestic cosmetics industry. This study also suggested an overseas investment strategy and an overseas permit/approval agency for small and mid-sized enterprises, and the amendment enforcement of current punishment-centered cosmetics laws, as well as the removal of export inhibitors, such as redundant approval procedures.