S. Korean beauty products face chill over THAAD
Quality problems also causing some shoppers to worry
Although exports of South Korean beauty products to China have been unaffected so far, analysts warned that those products may experience a distinct chill in China amid rising tensions over South Korea’s decision to deploy the US high- end antimissile system known as Terminal High Altitude Area Defense ( THAAD). At an Innisfree cosmetics store in Huamao Shopping Center in Beijing’s Chaoyang district on Sunday afternoon, several saleswoman were busy introducing the South Korean brand’s star products, including moisturizers and other foundations, to a dozen consumers. "The traffic is as usual, probably a little more as we have launched a marketing campaign this weekend,” a saleswoman who preferred not to be identified, told the Global Times as she helped a consumer try out the company’s latest facial cushion compact, a multifunctional sponge application.
She noted that the store “has not yet felt the impact of THAAD [ on Chinese consumer sentiment] so far.”
Behind her was a large display board showing the South Korean brand’s spokeswoman K- pop star Yoona.
One consumer, a 22- year- old white- collar worker surnamed Li, said she has used various products under the brand since 2014. “The brand has a focus on using natural ingredients derived from flowers and tea leaves, and it is sold at prices I can afford,” Li told the Global Times on Sunday.
But Li also stressed that she had started to look for an alternative in the wake of THAAD, and it will probably be from a domestic brand. “I am incensed by South Korea’s decision, and I will soon stop giving them my money.”
Chinese consumers like Li have made up the largest overseas source of business for South Korean cosmetics exports in recent years. In 2016, China accounted for 37.5 percent of South Korea’s total cosmetics exports, up from 22.1 percent in 2013, according to data from the Korea International Trade Association.
Exports of South Korean cosmetics and beauty products to China jumped to a record of $ 1.57 billion last year, up 45 percent year- on- year, the figures showed.
In January, South Korea shipped $ 90 million worth of skincare creams, facial masks, compacts and other cosmetics items to China, or 45 percent of its total export volume, according to a report by the South Korean Ministry of Trade, Industry and Energy in February.
However, analysts said that the popularity of South Korean cosmetics is likely to decline in China in the wake of THAAD deployment.
On Saturday, a post went viral on the Chinese social media, claiming that chairman of Lotte Group Shin Dong- bin said in an interview by a South Korean news portal that he isn’t worried about Chinese protests as “they are philistines and lack courage and integrity,” and that they will buy goods from Lotte once the store chain cuts its prices.
But the company said in a statement sent to the Global Times that Lotte didn’t grant any interview about the THAAD.
The concerns over political tension prompted consulting firm NH Investment & Securities to slash its forecast for the operating income growth of five major South Korean cosmetics companies from 16 percent to 12 percent this year, the Korea Times reported in January.
“In the past, South Korean culture, including dramas and K- pop stars, aroused Chinese consumers’ interest in South Korean beauty products such as BB cream and CC cream and boosted domestic demand,” Chen Min, editor- in- chief of industry website C2CC, told the Global Times on Monday.
But as South Korean culture is less welcome in China than before and public anger over THAAD is mounting, the situation will soon reverse, said Wang Guanghong, the editor of magazine Cosmetic Observer.
Wang cited the example of Japanese cosmetics manufacturer Shiseido, whose business in China has waned in recent years due to a Chinese public boycott amid growing tensions over the Diaoyu Islands.
Also, Chinese consumers are gradually losing faith in South Korean cosmetics products.
An increasing number of imports have been exposed as having quality problems. In January, Chinese authorities refused to approve the import of 28 cosmetics shipments, citing “their failure to provide certificates.”
Among this number, 19 were South Korean, including shampoo by JC Lion and body wash products by Aekyung.
These concerns will prompt plenty of Chinese consumers to stop buying South Korean cosmetics products, experts said. The gap in the market “will soon be filled by domestic producers like Pechoin, which also advocates concept of natural ingredients, and foreign rivals like L’oreal, which has already built a research center for Asian skin,” Chen pointed out.
But since it may take time for consumers to find suitable substitutes, the effect of their shift will also take a while to emerge, Wang told the Global Times on Monday.