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Mix of innovation, soft power drives 'K-beauty boom' in China

Eating exotic and wild species is nothing new in China, just like a saying well known in

Guangzhou: "Chinese will eat everything with four legs except tables and eat everything that swims except a submarine."

Their openness to new ingredients and recipes strikes a similar note, as South Korean cosmetics companies embrace such quirky ingredients as snail slime, horse oil and pig skin collagen as long as they are considered good for the skin.

With ingredients ranging from an extract from cocoons, goat milk and volcano clay, Korean beauty items come in all imaginable forms. They range from hair mousse styling foam and fruit flavored yogurt to mask sheet packs for the feet and breasts.

The relentless experimentation may be one of the most decisive factors behind Korean cosmetics' success in China, which helped spread the "K-beauty boom" beyond Asia to reach Western customers over the past few years.

South Korea's cosmetics exports to China doubled on-year to $1.08 billion in 2015, which accounts for nearly 40 percent of its total global sales, according to the Korea International Trade Association. South Korea is the second-largest cosmetics exporter to China following France.

Chen Ming, a 30-year-old makeup artist from Guangzhou, says she has tried several basic skin care products and massage packs by Korean brands, which emphasize naturally flawless skin. For the "nude makeup look," she is willing to try highly functional cosmetics with bizarre ingredients.

"Let's say horse oil is known as good for moisturizing and healing for skin, but you don't want to use it until it is turned into some kind of dermatological formula to apply onto the skin,"

the resident of China's third-largest city on the southern coast said. "Unlike major Western cosmetics, many Korean cosmetics put key ingredients before labels to give a sense of what it is made of. I think it's an effective way to sell a product."

While major cosmetics companies, including No. 1 AmorePacific Co. and its smaller rival LG Household & Healthcare Ltd., have a wide range of luxury and lower-end lines, independent brands put more focus on targeting safety-conscious Chinese consumers who also care about price tags. Most lower-end brands have lineups ranging from $10 to $50 per item, with advanced formulas below $100.

"In China, cheap products are considered not reliable because they could contain harmful chemicals, while expensive products are just too expensive for ordinary consumers," Lou Wei, a 46-year-old music teacher in Guangzhou, said. "Korean products are known as cost-effective compared to Western brands. Plus, the skin types are similar between Koreans and Chinese."

The unwavering popularity of Korean dramas and entertainment shows has also elevated their brand power to the next level.

According to a survey by the Korea International Trade Association last year, 70 percent of 1,400 middle-class consumers in major Chinese cities said they have seen Korean dramas and shows. Eight of them evaluated that such experiences positively affected their perception towards Korean products.

Most recently, "Descendants of the Sun," a mega hit KBS drama currently on air both in Korea and China, showed how companies can benefit from consumers who want to mimic styles of celebrities.

Laneige, AmorePacific's mass brand, saw skyrocketing sales of items used by actress Song Hye-gyo, who starred as a doctor in the drama, which was viewed a combined 1 billion times on iQiyi, its official streaming site in China.

At 11st Street, a Korean online retailer that runs a Chinese language site, sales of Laneige's blemish balm pact jumped 10-fold from March 14 to March 20, while a new lipstick sold out three days after its release.

"As Korean dramas were usually aired in China at least several months later, sales of related products were reflected with time lag," said Yoo Sang-woo, a sales director at 11st Street's Chinese shopping page. "As 'Descendants of the Sun' is simultaneously aired in Korea and China, the customer reaction is almost instant."

While major players have built production lines in China to get ahead in the fast-growing market, smaller brands have raised considerable sales at duty-free shops and through Chinese vendors who buy in bulk in Korea and resell with a margin both online and offline.

Experts say the biggest hurdle for those who have yet to establish a direct sales network in the mainland is how to tackle the rising number Chinese knock-offs, stressing the need to expand official distribution channels.

"In the case of best-selling items, consumers are reluctant to buy them at local shops or through private vendors over concerns of fake products. Some of them buy cosmetics in Hong Kong shops or ask a favor of friends visiting Korea," said a Guangzhou-based trade official. "Chinese prefer products made in Korea because they have safety concerns over food and anything related to the body."

In light of such growing calls, the Korea Trade-Investment Promotion Agency (KOTRA) has pledged to provide support to emerging cosmetics companies via overseas marketing efforts jointly with international retail giants.

On Wednesday, KOTRA held a "K-beauty Summit" with officials from 40 small and medium-sized cosmetics companies and U.S. retail behemoth Amazon. It also agreed with Taobao, the online market place by Chinese e-commerce giant Alibaba, to hold a beauty trade fair in the first half of this year to expand their sales network.

Experts say online marketing efforts have become ever more important for further expansion to reach out to the growing number of smartphone users in smaller Chinese cities.

"Despite recent economic slowdown, the Chinese consumer goods market still offers a great deal of opportunities to Korean cosmetics and clothing companies," Park Hyun-jin, a researcher at the Seoul-based Dongbu Securities, said.

"The e-commerce market will continue to grow thanks to the popularity of mobile shopping. As the number of smartphone users has sharply risen in smaller cities and urban areas, brand marketing via mobile and online will help boost sales in China." (Yonhap)

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