How South Korea drives Asia's love affair with cosmetics

Willie Grace | 11/6/2014, 6 a.m. | Updated on 11/6/2014, 6 a.m.
There are serried ranks of demonstrations as shop assistants jostle for attention armed with French moisturizers, South Korean all-in-one BB ...

(CNN) -- The cosmetics section of any department store anywhere in the world might usually be the first thing you encounter when you walk through the door, but in China it's often a mirror maze on a vast and dazzling scale.

There are serried ranks of demonstrations as shop assistants jostle for attention armed with French moisturizers, South Korean all-in-one BB creams and Japanese lip glosses and violet eye shadows.

If department stores in Asia are the battle ground for its emerging middle classes, then the cosmetics counter is its front line.

Big demand

In China, cosmetics now outstrips groceries as the biggest selling item in its department stores, according to a report from Fung Business Intelligence Center.

In 2013, Chinese women, and increasingly men, spent 162.5 billion yuan ($26 billion) on cosmetics in an industry that showed 13.3% growth year-on-year, according to the same report citing figures from Euromonitor International.

Japan's annual beauty and personal care market is still the largest in the region at about $50 billion, second in the world only to the United States (which is about $70 billion), according to Euromonitor International.

But China's 150 million-strong middle class is closing the gap fast.

For them, however, ground zero in terms of models of beauty is increasingly South Korea.

While South Korea's domestic market is only a third the size of China, in terms of soft power the country punches well above its weight thanks to Asia's insatiable appetite for Korean drama series and their stars.

China's middle class is expected to grow to 500 million within a decade. By 2030 around one billion people in China could be middle class -- as much as 70% of its projected population, according to a report from EY.

In terms of brands, according to Euromonitor, L'Oréal China continued to hold the leading position in the Chinese cosmetics market in 2013 with a value share of 34%.

And while South Korean brands might be little known outside the region, thanks to the popularity of K-pop and Korean soap operas -- whose stars such as Song Hye-kyo and Kim Hyun-joong and Yoona of Girls' Generation are household names in the Asia-Pacific region -- Korean beauty brands are now the hottest ticket item in China.

Star power

One Korean brand in particular, Laneige (meaning the "the snow" in French) and made by South Korea's AmorePacific Corp, is popular among China's middle classes. With its blue and white design and French cachet, the skincare product benefits from the soft power of being South Korean and, more importantly, cheaper.

Vivienne Rudd, director of global innovation at market researcher Mintel, said South Korean beauty and personal care retail market posted 5.8% growth year-on-year to 2013 compared with just 2.1% for the UK and 3.9% for the US.

"The success of South Korean brands has a lot to do with Chinese consumers copying the style of South Korean soap opera and music stars," Rudd told CNN. "They'll even go so far as to get the particular products being used by these stars. The stores will try to get in the exact shades that South Korean actresses are using."