The Korea Herald is publishing a series of articles titled Global Brand as part of the first installment of Power Korea. Korea’s success story is a 60-year-old tale written by not one, but many who worked to build one of the world’s most powerful nations from the ashes of war. This Global Brand series is designed to honor those who made this Korean Dream come true. This is the 11th part of the Global Brand series. ― Ed.
Nearly five decades ago, AmorePacific became the first homegrown cosmetics brand to pitch and sell its products overseas.
It was in 1964 when the country was still wrestling to join the ranks of the era’s more industrialized nations.
Since then, the cosmetics maker has been creating and recreating “beauty” in Korea, Asia and all over the world.
The goal now is to become one of the world’s top seven cosmetics companies by 2020. To achieve this ambitious objective, AmorePacific is working to reshape its portfolio to increase overseas sales to 45 percent or more of its total sales. Further, it will be creating up to 10 so-called “mega-brands” within AmorePacific, each raising sales of 500 billion won ($450 million) or more.
|Chairman Suh Kyung-bae and Founder Suh Sung-hwan. (Illustration by Park Gee-young)|
“The bottom sales line will be 5 trillion won, globally, by 2020,” says Suh Kyung-bae, chairman and CEO of AmorePacific.
Suh, who inherited the company from his father and founder of AmorePacific Suh Sung-hwan, kept the company on the global track.
Once a small local firm, AmorePacific has now transformed into a powerful global enterprise. Suh’s feats include the successful separation between the holding company AmorePacific Group and the sales arm AmorePacific.
Efforts to form a holding company system were pursued from the 1990s, and it was a pursuit for better corporate governance, increased focus on core competence, enhanced shareholder value and, last but not least, a diversification of risk. It was also under Suh’s helm that AmorePacific became recognized as a true global brand.
From early on, from the days when it was known as just Pacific Corp. cosmetics, AmorePacific realized the importance of going global. Since the 1990s, the company has turned its gaze abroad, building plants in China and France to lay the foundation for onsite production.
Now, the company boasts solid operations in the top five markets around the world ― North America, Western Europe, Southeast Asia, China and Japan. Particularly in China, North America and France, AmorePacific is breeding its core competence.
“There’s also always room to reach out further, to other regions and areas that we have not ventured before,” offered Suh.
As of the end of last year, the global businesses of AmorePacific proved to be reaching closer to the 2020 goal.
The sales that the company registered in December 2012 reached 442.8 billion won, which reflected a near 35 percent increase from the previous year.Smashing success in Asia
AmorePacific’s success story in Asia is unprecedented for any local cosmetics maker.
In China, the company’s annual growth rate neared 38 percent last year, which comfortably surpassed the goal it had set for itself in the region.
The 1990s was when AmorePacific first entered the Chinese market. It was even before China’s economic opening began, but Amore was already operating an overseas office in Shenyang.
A few years later, AmorePacific made the critical decision to christen its “LANEIGE” brand as its flagship brand for China.
To make sure the takeoff would be successful, meticulous planning was involved: the cosmetics maker first launched in Hong Kong as a sort of a pilot market, where it sought to build its image by opening its first store in a prestigious department store. Now AmorePacific operates 23 stores in Hong Kong, with each generating monthly average sales of up to 100 million won.
Based on the Hong Kong experience, AmorePacific opened another office in Shanghai, the commercial hub of China, and began to knock on China’s doors with the Laneige brand.
There are now almost 300 LANEIGE stores operating in the top 80 cities of China, including Shanghai.
Sulwhasoo ― AmorePacific’s most high-end brand based on recipes using Korean herbs ― also has been making headway in China. The brand was launched in a department store in Beijing in 2011 following the decision from the company that China was now ready to welcome Sulwhasoo, as the consumers have been exposed to AmorePacific for a decade now.Onward to America and Europe
On the other side of the globe, North America and Europe also are seeing a rapid growth of AmorePacific, which is catering to the changing needs of people who now want a more delicate touch to the cosmetics they use ― something that can be offered by AmorePacific, but in stylish and modern wrappings.
In 2003, AmorePacific opened a flagship store ― AmorePacific Beauty Gallery & Spa ― in the trendy SoHo neighborhood of New York City. Now, the brand is sold in 45 department stores in the U.S.
The venture into France was marked by the AmorePacific “Soon” brand, and reached a peak with Lolita Lempicka perfumes and colognes that were sold there since 1997.
This brand is sold in more than 100 countries around the world. Based on the success, AmorePacific now operates a state-of-the-art production facility in France.
Annick Goutal is the current name of the game in France, as AmorePacific acquired the perfume house in 2011 to become the first Korean firm to acquire a foreign beauty brand. Solid R&D
Research and development, or rather the undying desire to keep it going, forms the core foundation of AmorePacific’s cosmetic empire.
Even now, a new research facility is in the making in Shanghai. By March 2014, AmorePacific plans to build a facility that will span some 92,788 square meters of land to become one of the top such research labs in China.
This particular facility will be capable of producing up to 100 million units of cosmetics per year, according to company officials.
These efforts do not stop there. At home, designed to be one of the most aesthetically pleasing research facilities in the country, is the company’s second R&D center, named “Mizium” ― “Mi” means “beauty” in Korean and Chinese ― a place where “space dominates thoughts.”
“This essentially means that we wanted to create a space where researchers could creatively do their work,” Suh explained.
Recognizing the importance of R&D, Suh has plans to increase the number of staff to 500 by 2015 from the current 350.
AmorePacific was the nation’s first cosmetic maker to even have an R&D facility, set up in the post-Korean War days of 1954.
And it was not only cosmetics, but AmorePacific also delved into research on medicine and health supplements as part of its efforts to create healthier living habits. In 2006, it added a food research lab and began to further develop healthy foods, such as green tea and others.
It was such R&D that led to the creation of the upscale Sulwhasoo line in 1997.
Sulwhasoo, the company’s priciest lineup, was based on painstaking research that finally proved the beneficial effects of herbs and plants on the skin.
For AmorePacific, R&D was not a choice, but a necessity as it made its way further up and out in the world.
By Kim Ji-hyun (email@example.com