Cosmax and Alibaba partner to distribute Korean beauty to China

By Natasha Spencer

- Last updated on GMT

Related tags Korean cosmetics Korea South korea

Cosmax and Alibaba partner to distribute Korean beauty to China
Cosmax, South Korea's biggest cosmetics original development manufacturer (ODM), has teamed up with China’s online retailing giant Alibaba to create a new e-commerce platform to distribute Korean cosmetics throughout China.

The partnership will seek to bridge the gap between the Korean and Chinese market by developing a specific e-commerce platform that will directly distribute cosmetics products to China, building on the success of the Korean cosmetics and beauty sector.

Consumer demand for Korean innovations and trends in China is already high, and this newest collaboration aims to increase the market space for Korean beauty further.

Cosmax, which specialises in global cosmetics research, development and manufacturing, signed an agreement to establish an online flagship store on Chinese business-to-consumer (B2C) retailer Tmall.com, part of e-commerce giant Alibaba.

As agreed in the contract, Cosmax will act as a multi-shop operator and will look after cosmetics brands on Tmall.com. Currently, the majority of Chinese consumers use the domestic site, Tmall.hk, to purchase its beauty favourites rather than its international counterpart, Tmall.com.

Cosmax is the first Korean multi-shop operator on the international arm of the retailer, Tmall.com.

To date, business operations between Korea and China have been affected by hurried exports as Korean product manufacturers have been keen to distribute their lines to the Chinese market to maintain high demand.

From Korea to China

This expeditious approach, however, has left Korean brands relying on local, independent traders to sell their cosmetics and beauty ranges.

 Although products are sold faster, these sellers do not undergo the official clearance process, which although time-consuming and onerous, protects brand reputation and quality.

Cosmax’s Tmall platform is expected to improve this current distribution process by accelerating the China Food and Drug Administration’s (CFDA) hygiene approval process for Korean cosmetics companies.

The use of innovative digital marketing through social media sites such as Weibo will be used to promote Korean beauty products and trends in China.

It will be particularly useful for those brands that sell their beauty products at the Cosmax mall, which results in increased Korean cosmetics exports to China.

Cosmax, which entered into the Chinese marketplace in 2003, currently operates cosmetics factories in Shanghai and Guangzhou.

Record-high earnings

In the first half of 2016, Cosmax reported sales of 371.2 bn (€295.6 mn), representing a total 40.2% YoY growth, 45.7% growth in operating profit of 31.3 bn (€24.9 mn) won.

This year’s figures so far are the company’s largest first half-year sales, reflecting the growth of its domestic cosmetics business.

In 2015, in China alone, Cosmax took in over 200 billion won (€170.1 mn), and due to its rapid growth in the Chinese market, it anticipates this figure to reach 1 trillion (€939.3 bn) won this year.

Cosmax reported that "85% of ​Cosmax China revenue comes from the Chinese domestic brand​". Therefore, creating fast, efficient and effective distribution channels and relationships between Korea and China is important to satisfy consumer demands and increase the presence of Korean beauty products and trends.

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