AmorePacific Group expects sales in China to jump 30 percent this year as the South Korean cosmetics producer opens more outlets to capture a wealthier Chinese middle class keen to look more like their Korean idols.
"China is geographically close and it has a very big population," Suh Kyung-bae, the billionaire chairman of the Seoul-based holding company of AmorePacific Corp, said in an interview. The company recognized the importance of Asia's rising middle class 15 years ago, and this is still one of its main drivers, Suh said at the cosmetics maker's factory in Osan, South Korea.
AmorePacific Corp, South Korea's largest cosmetics maker, joins companies such as Hotel Shilla Co and casino operator Paradise Co in benefiting from the rising popularity of Korean entertainment and culture, especially in China. The maker of facial creams and ginseng serums plans to increase the number of Laneige and Sulwhasoo sales outlets in China and work with more online retailers to sell its products, Suh said.
AmorePacific Group, whose brands also include Etude and Mamonde, competes with Procter & Gamble Co and L'Oreal SA in selling products such as the 270 yuan ($43) Laneige and 188 yuan Innisfree-brand facial creams in China.
The company, which has 2,335 stores in China, plans to raise that by 15 percent this year, it said.
AmorePacific Group had 2.1 percent of China's 131.4 billion yuan skin care market in 2013, the 12th-biggest share, according to Euromonitor International. L'Oreal has the largest market share with 11.4 percent, according to the industry researcher.
Suh is South Korea's third-richest man with a net worth of $6.8 billion, according to the Bloomberg Billionaires index.
AmorePacific Corp's shares jumped 19 percent in January, making it the best-performing stock in the beauty and personal care sector globally, according to data from Bloomberg Industries.
China and Southeast Asia will be the biggest growth drivers for the group, said Kim Bo-young, a Seoul-based analyst at BNP Paribas Securities Korea Co.
"The Southeast Asia market has become almost half the size of China," said Kim, who has a buy recommendation on AmorePacific Corp. "It is also enjoying faster growth, and there is a meaningful number of middle class looking to buy affordable luxury brands."
AmorePacific Group said on Feb 3 sales grew 21 percent to 4.7 trillion won ($4.3 billion) in 2014. China is its biggest market outside South Korea and accounted for 8.6 percent of sales in 2013.
China may make up 30 percent of AmorePacific Group's total sales by 2020, Chief Strategy Officer Kim Seung-hwan said last year. The group expects to more than double sales to 12 trillion won by 2020, with half of that coming from overseas, it said last October.