Skincare product maker Charmzone is eyeing Russia as its newest export destination on the recent success of its high-end cosmetics line that contains patented ingredients.
The 29-year-old company, which made headlines in 1991 for becoming the first Korean cosmetics firm to obtain approval from the Japanese government to sell its products in the neighboring country, has built a reputation for solid quality.
“Trade Representative of Russia in Korea Mikhail Bondarenko was so greatly impressed by our product quality that he proposed we export to Russia,” Charmzone chairman Kim Kwang-seok said in an interview with The Korea Herald.
|Charmzone chairman Kim Kwang-seok. (Park Hae-mook/The Korea Herald)|
“He also suggested that we translate my memoir into Russian to inspire Russian students and public officials.”
Charmzone exports to China, where it sees about 10 billion won ($8.9 million) in annual sales, and 18 other countries including Japan, the U.S., Taiwan, Thailand, Canada and the Czech Republic.
It has been the second-best-selling cosmetic brand on Japan’s home shopping channel QVC for years.
“We are also being considered as one of Korea’s top two brands to open stores in the duty-free shop of the new terminal to be built at Singapore’s Changi Airport,” Kim said.
Terminal 4 of Changi Airport is scheduled to be completed in 2017.
Despite its unwavering devotion to quality and its “3S” strategy focused on samples, seminars and service, Charmzone’s business treaded water from 2000 as it failed to cope with the diversifying sales channels.
“We used to sell mostly through general cosmetics stores, but from 2000, the beauty market diversified to online, large discount stores and home shopping, and we didn’t keep pace with the change,” said the pharmacist-turned-entrepreneur.
“We saw a big problem with many of the companies that did. They chose OEM production, which compromises quality. Not many consumers know that Charmzone is one of the few cosmetics firms in Korea that does both manufacturing and distribution.”
As the company refused to jump on the bandwagon, its business tumbled to a low point in 2010, when Charmzone built its current headquarters in Daechi-dong, southeastern Seoul.
The Audi dealership business that his eldest son had started in 2004 was losing money to the point that Kim worried about Charmzone going bankrupt as well.
“Thankfully, the banks that worked with me for long had trust in me. In 2010, we also managed to launch our ambitious high-end product line Charm In Cell, which we had worked on for years,” he said.
Sales of Charm In Cell cream, which contains the patented Tocovita C ― a combination of fat-soluble tocopherol and water-soluble vitamin C ― have continued to rise through word of mouth despite its high price of 400,000 won per bottle.
After struggling for six years, the Audi dealership business of Charmzone Motors also started to turn around.
“I had opposed my son’s import car dealership business plan from the beginning, but he was really determined and I eventually gave in,” Kim said.
“I regretted the decision until Audi sales picked up, interestingly, due to heavy snowfall in Korea over the past three winters. Audi’s rear-wheel-drive system worked well in snow, and now we are selling more than 300 vehicles per month.”
The Charmzone headquarters, located on the middle of a street full of import car dealerships, houses the nation’s largest Audi showroom that has all the Audi models on the first two floors, and a skin-care service facility on the basement level.
The value of the building site, which Charmzone bought in 2000 for the price of 14 million won per pyeong (3.3 square meters) in an auction after its previous owner went bankrupt, jumped by tenfold since.
“The success of Audi helped us win dealership rights for Bentley and Lamborghini (Charmzone Automotive run by Kim’s second son), which also belong to Volkswagen Group,” Kim said.
The core business of Charmzone Group, however, will always be cosmetics, which Kim has poured his heart into with steadfast principles, he said.
Apart from its hit TV commercial featuring a green frog in the 1990s, Charmzone doesn’t do advertisements. It relies instead on winning customers’ loyalty through samples, free skin-care service and “seminars” led by the chairman himself at the factory in Wonju, Gangwon Province.
Seventy-four-year-old Kim has guided some 250,000 visitors to the Wonju plant over the past 22 years.
“Superb products do PR, not commercials. People who have experienced our products become our loyal customers forever, and this is why, unlike other cosmetic firms, we don’t need to advertise,” he said.
“And I know this because I ran television and radio commercials for my pharmacy decades ago. People know your name for a while, but they forget it the moment you stop airing commercials.”
Kim founded Charmzone in 1984 based on his 20 years’ experience as a successful pharmacist.
He started mixing dermatologic products in the 1960s by chance to cure a type of scabies from Japan that spread in Korea after the 1964 Tokyo Olympics.
Kim himself caught the condition at a public bath, and after trying all the ointments at his pharmacy in vain, he began mixing them and incidentally, one of the formulas worked.
This experience led him to study dermatology and develop external applications for skin diseases. His pharmacy named “Pi Bo” gained fame nationwide for dermatologic remedies through the 1970s.
By Kim So-hyun (email@example.com