South Korean cosmetics makers will see accelerated sales growth in China next
year, boosted by unwaning demand for Chinese consumers' beauty products, a
report said Monday.
Hyundai Securities said in the report that Korean
cosmetics makers are expected to enjoy a renewed growth spurt in China in 2013,
on the back of increased sales channels as well as capacity expansion.
China's cosmetics market is projected to expand at a compound annual growth rate
of 12 percent through 2014, Hyundai Securities said.
Cosmetics consumption
is expanding in China, strengthened by the government's consumption boosting
policies and augmented spending power stemming from rises in wage levels, it
said.
"It is particularly encouraging that female consumers in China
have strong spending power and aggressive consumption propensity, while brand
awareness of Korean cosmetics makers is improving thanks to the positive
influence of the Korean Wave and sound product quality," said Hyundai Securities
analyst Kim Hye-rim.
"As such, Korean cosmetics companies are well
positioned to benefit from the expansion of China's cosmetics market."
Chinese operations of South Korea's No. 1 cosmetics manufacturer AmorePacific
Corp. are projected to account for 10.9 percent of its company-wide operating
revenue in 2013 and 15.8 percent when revenues from duty-free shop purchases by
Chinese visitors are included, the report said.
LG Household &
Health Care Ltd.'s China operations are forecast to account for 3.6 percent of
its revenue and 4.2 percent of operating profit next year, driven by brisk
household and personal care product sales, and efficient store expansion for its
flagship brand The Faceshop, it said.
The two firms are the first
South Korean cosmetics manufacturers that made full-fledged forays into China by
establishing sales subsidiaries in Shanghai in 2000.
South Korean
original equipment manufacturers, such as Cosmax Inc. and Korea Kolmar Co., are
also anticipated to see higher earnings contributions from their Chinese
businesses, Hyundai Securities said.
Latecomers Genic Co. and Bioland
Ltd. are also expected to see their mid to long-term growth potential increase,
as they have recently completed capacity expansion in China, it said.
According to the National Bureau of Statistics of China, retails sales of
cosmetics enterprises reached 110.3 billion yuan in 2011, up 18.7 percent
on-year.
The growth was faster than that the 16.6 percent on-year
expansion in the previous year.