COSMAX, the world’s leading cosmetics ODM (Original Development Manufacturing) company, is investing 130 billion won ($97 million) to establish its first research and development campus in China. COSMAX, which entered the Chinese market in 2004, saw sales peak at 632.8 billion won in 2021 but experienced a 16% decline last year due to economic challenges. Despite this, the company remains optimistic, expecting increased demand for cosmetics in China and moving forward with additional investments.
The company operates factories in Shanghai and Guangzhou, producing products for various cosmetics brands, 90% of which are Chinese. With the new investment, COSMAX aims to enhance its R&D capabilities and increase annual sales from 540.3 billion won in 2022 to 1 trillion won within five years.
A COSMAX official said that out of China’s population of 1.5 billion, only about 200 million people currently use cosmetics, with many not even using basic skincare products. The company predicts that the number of cosmetics users will double in the next four to five years, driven by economic stimulus efforts, particularly in third- and fourth-tier cities with populations of 1 to 4 million.
South Korean companies have faced difficulties in China since the Chinese government imposed retaliatory measures following the 2017 deployment of the THAAD missile defense system in South Korea. Retail giants such as Lotte and E-Mart were forced to withdraw, and automakers and petrochemical firms have seen their market presence diminish. Amid U.S.-China tensions and supply chain restructuring, investments in China have slowed.
However, some mid-sized South Korean companies are finding opportunities, targeting niche markets and appealing to China’s younger generation with premium products.
SGC Solutions, the maker of Glasslock food storage containers, recently launched a line of small appliances aimed at China’s “post-90s” parents. These products include baby food makers and sterilizers, reflecting a growing trend for premium parenting products. SGC Solutions expects its sales in China to more than double this year.
“Parents born in the 1990s are increasingly choosing premium products for their children, instead of cheaper options from platforms like AliExpress or Temu,” a Glasslock official said. “Although some restrictions on South Korean goods and ‘patriotic consumption’ trends remain, the trust we’ve built over more than a decade continues to drive demand.”
Zinus, a mattress company, has also been expanding its presence in China. The company opened its first standalone store in Shanghai in July and has launched on Chinese e-commerce platforms JD.com and Pinduoduo. Zinus, known for its best-selling mattresses on Amazon in the U.S., has gained popularity among Chinese consumers. The company also opened a standalone duty-free store in Seoul’s Dongdaemun district, offering free delivery of mattresses to China. Zinus plans to open 10 additional stores in China by the end of the year.
Yoga apparel brand XEXYMIX, operated by BrandX Corporation, is expanding its footprint in China as well. After establishing a Chinese subsidiary in 2020 and building its reputation on major online platforms like Tmall and JD.com, XEXYMIX has opened seven physical stores in cities including Shanghai, Shenyang, and Jinan. The company plans to open more than 20 stores by the end of this year.
“The athleisure market in China is just starting to take off among consumers in their 20s and 30s,” a XEXYMIX official said. “More than 80% of customers who visit our stores end up purchasing multiple items, typically three to four pieces at a time.”
ST Youngwon, a producer of lithium-ion battery separators, is another South Korean company making strides in China. The company has gained a foothold in China’s battery industry by offering faster and more affordable delivery equipment than competitors from Germany and Japan. ST Youngwon saw its exports to China grow to 56.8 billion won last year and reached 46 billion won in the first half of this year.
“While China’s technological capabilities have improved, there are still areas where we can compete,” CEO Kwon Soon-sik said. “It’s a market we cannot afford to give up on.”
