The political tension between Seoul and Beijing has eased after a summit between the two leaders during the APEC Summit, but K-beauty companies are diversifying their overseas operations instead of returning to the Chinese market.
Supermarket chain E-mart said that it has signed a franchise deal with Saudi Arabia’s largest retailer Fawaz Alhokair. Under the contract, E-mart is set to sell its cosmetic brand Sentence at Fawaz Alhokair shopping malls.
Fawaz Alhokair operates 21 shopping malls in Saudi Arabia, and E-mart said it will open one Sentence store in the Riyadh and Jeddah malls by March. Another four more stores are expected to be opened by the end of 2018.
The nation’s largest cosmetic company AmorePacific also plans to open its first Middle Eastern store in the United Arab Emirates in January while preparing to open others in Saudi Arabia and Kuwait.
AmorePacific signed a partnership deal with the Middle East’s largest retailer Alshaya Group.
LG Household & Healthcare has already entered the Middle Eastern market. It now operates more than 60 The Face Shop stores in Saudi Arabia while another K-beauty brand Tonymoly has opened five stores in the country, including two in Jeddah and one in Riyadh.
Market researchers say their surging interest in the Middle East is attributed to the market’s growth potential.
London-based consultancy Euro Monitor said the Middle East cosmetic market was worth 19.5 trillion won (US$18 billion) in 2015 but is expected to reach 39.1 trillion won by 2020. The figure is double the average growth rate of the world’s cosmetic market.
Likewise, Korean cosmetic firms’ exports to the market have soared.
According to KOTRA, Korean firms exported only 150 million won worth of cosmetic products to the Middle East in 2008. The figure, however, jumped to 40.1 billion won last year, a 265-fold increase over eight years.
“The cosmetics market in Saudi Arabia has grown 10 percent a year on average for the last decade. This is one of the most rapidly growing cosmetic markets in the world,” an E-mart official said.
“Korean cosmetic products are expected to enjoy good sales there thanks to booming Hallyu popularity.”