K Beauty Fair Looks to Russia for Much-needed Diversification

Buyers visit a booth at the Intercharm Beauty Expo Korea show in Seoul.

Courtesy

SEOUL — Last week, Intercharm Beauty Expo, a major South Korean beauty trade show, took place in Seoul, at Coex Convention and Exhibition Centre in Seoul’s major commercial district, Gangnam. The three-day event featured a diverse array of Korean skin care, with more than 100 local brands exhibiting products. A major addition to this year’s event was the Russian pavilion showcasing major Russian skin-care brands, as well as the noticeable numbers of Russian buyers. The event also marked the 15th edition of the fair, and more importantly, the rebranding and relaunch of Intercharm Beauty Expo Korea, formerly known as Beauty Expo Korea, and its new partnership with Russian cosmetics trade show organizer, Intercharm Professionals. The South Korean organizer of the event, Reed K. Fairs Exhibitions, who also partnered with local exhibition and convention company Seoul Messe International, said the key reason for linking with Russia was the Korean cosmetics industry’s need to diversify, especially in the aftermath of South Korea’s tensions with China over its deployment of the Terminal High Altitude Area Defense antiballistic missile system. South Korea saw a huge fall in Chinese tourism, Chinese tourist-related domestic retail sales, and experienced issues in exporting its cultural content to China much of this year, due to an unofficial boycott by China over its disapproval over THAAD. South Korea is expected to experience a devastating $15 billion deficit this year, due to the drop in Chinese tourism and retail sales alone. Along with tourism and entertainment, Kbeauty is one of the sectors that has been hit the hardest, as profits fell for the nation’s major beauty producers. One of the nation’s largest cosmetics producers, AmorePacific, reported net income between July and September this year dropped to 79.8 billion won (or $73.4 million), compared with 117 billion won (or $107.6 million) during the same period in 2016, according to Yonhap. Other brands have experienced similar plunges in sales. “The South Korean beauty market was quite affected by the drop in Chinese consumers,” said Hadley Hong, project director at Reed K. Fairs Exhibitions. “Our industry, they realized — we cannot depend on the Chinese market so much. We need to aggressively find a new market which is not so risky, or changeable.” Despite reassurance from both sides — China and South Korea have promised to resume good relations, and local press cite Chinese consumption will go back to normal by February — THAAD tensions has left the K beauty industry shaken. “Last year, our major visitors were Chinese, but because of this kind of conflict, we could lose our biggest customers [if it were to happen again],” said Hong.  “In Korea, we think that Southeast Asia, the Middle East, or the Russian and Central Eastern European markets have great potential. This is the kind of discussion that [the K beauty industry] had while we were in the middle of THAAD,” he added.Last year, K beauty exports to Russia totaled more than $48 million, according to the Korea Trade-Investment Promotion Agency. While makeup and skin-care products saw a 69 percent increase in sales year-over-year, and are expected to continue to grow.“Yesterday, we had a conference held by the Russian embassy in Korea. They came here to give visitors information about what’s going on in the Russian market and how to sell well in the Russian market. More than 150 people from local Korean companies came,” said Hong, adding that many Korean firms are eager to gain entry into the market. Russian buyers at the event included PJSC 36.6, the nation’s largest pharmacy chain with more than 1,740 pharmacies. As well as beauty anthology retailer L’Etoile, who can be likened to Sephora, with 1000 stores in 200 Russian cities. Besides the Russia-centric focus, the event also saw many South Korean brands touting Kbeauty’s latest big trends including organic baby skin-care brands, “cosmedicals” or medical cosmetics, Jeju Island-branded products, and a vast aray of oral care products -including toothpaste in chewable tablet form, and Korean color cosmetics.