Cosmax mulls building cosmetics factory in Latin America
Hun-Hyoung Ha and Hyung-Joo Oh
Jul 04, 2024 (Gmt+09:00)
Cosmax Inc., South Korea's biggest cosmetics original development and design manufacturer (ODM), is considering building a new offshore plant in Latin America to meet burgeoning demand for its beauty products from around the world amid the ongoing Hallyu, or Korean Wave.
“We are reviewing a plan to build a new factory in either Mexico or Brazil to cement our position in Latin America and diversify our global supply chain,” Choi Kyoung, vice chairman of Cosmax, said on Thursday.
If the new facility is built, it would be the Korean cosmetics ODM giant’s sixth overseas manufacturing facility after plants in China, Indonesia, the US, Thailand and Japan.
The K-Beauty boom, which was originally started by Korea’s household names like Amorepacific Corp., is now driven by small Korean cosmetics companies such as Skin 1004 and Beauty of Joseon.
According to Korea’s Ministry of SMEs and Startups, cosmetics exports by SMEs accounted for 67.4% of the country’s total cosmetics outbound shipments.
They don’t have own manufacturing facilities or research and development capability but when their product and marketing ideas meet with Korea’s top two ODMs, Cosmax and Kolmar, they can debut their real beauty products in the market that sell well.
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Armed with world’s leading development and manufacturing capabilities, Cosmax and Kolmar have each invested 57% of their total revenue into R&D every year over the past few decades.
Cosmax boasts 1,300 staff working at its R&D centers at home and abroad.
As more consumers care about cosmetics’ ingredients and reviews, beauty products manufactured by Korean ODMs are considered relatively high quality compared to products from fragmented cosmetics markets, thus they rank higher in sales, said George Rivera, the chief executive officer of Kolmar USA.
Cosmax and Kolmar are also adept at quickly reflecting changes in beauty trends in products.
Thanks to the growing demand for their products, Kolmar Korea also expects to see a 48.8% jump in new customers this year from last year’s 170.
It has also been also actively seeking to expand its presence in overseas markets such as the US and the Middle East. It aims to complete its second US plant in Pennsylvania early next year.
According to estimates by securities firms, Cosmax and Kolmar Korea are projected to see 70.6% and 43.8% on-year gains in operating profit this year to 197.4 billion won ($143 million) and 195.7 billion won, respectively.
Cosmax sales are also expected to hit its record high of 2.20 trillion won this year while Kolmar Korea would reap its highest-ever 2.45 trillion won.
Write to Hun-Hyoung Ha and Hyung-Joo Oh at hhh@hankyung.com Sookyung Seo edited this article.