No doubt you have witnessed the astounding pace at which South Korean beauty brands have been conquering Western markets with innovative, vibrant products in very cool packages. Now, the ambitious country has set its sights on international start-ups by setting up camp in its own back yard.


Korea’s newfound reputation for advanced cutting-edge ingredients, formulation and packaging is due to a hefty amount of R&D investment of late. That kind of spending has contributed to international success for the likes of AmorePacific in skin care and color cosmetics segments around the world.


Naturally, Korea’s Ministry of Science is heavily promoting these capabilities to convince international cosmetics start-ups to set up shop in Pangyo—the country’s version of America’s Silicon Valley.


The “K-Startup Grand Challenge,” backed by government agencies and major Korean brands like LG Household and Healthcare, had received 250 applications from various industries in 66 countries ahead of this publication going to press, and the cut-off entry date of June 14.


The initiative has been three years in the making and Korea is being touted as a safe, politically stable and affordable place for entrepreneurs to start a business.


“The Korean economy needs to evolve in order to continue to thrive. We’re always looking for smart new partners to work with, just like many major companies in the West sponsor start-up initiatives,” Ministry spokesperson Dr. Changyong Ahn told Happi.


How It Works


This month, 80 handpicked teams are traveling to South Korea on an all-expenses-paid program for a week of intensive pitching and networking with Korean conglomerates eager to partner with promising concepts.


From that initial group, 40 start-ups will take part in a three-month “acceleration program” where they will have access to lab and office space as well as one-to-one mentoring sessions on Korean and Asian business culture, patents, accounting regulations and tax laws.



By December, the 40 will be whittled down to a lucky 20 and each company will receive a minimum of $30,000 to relocate to South Korea for six months and take part in a “settlement program.”


“Establishing the business in Korea is not mandatory but encouraged. We want these promising companies to stay in Korea after they see all of the benefits,” said Dr. Ahn.


The top four teams will also have access to additional funding between $6,000 and $100,000 as well as potential investment from a Korean accelerator against equity.


A campus worth $160 million will house the entire process and is within walking distance to the R&D labs of Korean tech giants LG, Samsung and Hyundai—all of them eager to assume mentoring roles.


“It’s important to remember that these aren’t monolithic tech companies,” added Dr. Ahn.


LG Household and Healthcare owns Korean cosmetics chain The Face Shop. The Lotte portfolio comprises of some of the country’s largest luxury department stores and CJ Group owns online and home shopping networks.


“Cosmetics companies in particular will benefit from the willingness of Koreans to try new products and give honest feedback, as well as being at the centre of cosmetics trends in Asia,” Dr. Ahn concluded.


Ideal for Young Visionaries?



South Korean consumers are traditionally image-conscious and willing to invest in beauty products to maintain their appearance, which means there’s room for domestic and international players alike to get a piece of the market.


It may be taxing though. As Asti Michou, communications executive at Euromonitor International points out, domestic manufacturers took up four of the top five positions in beauty in 2015—jointly accounting for 52% of value share.


“Domestic players are also keen on new product innovations and consistently bring out products with novel benefits, application methods and packaging during the year to sustain consumers’ interest,” Michou told Happi.


In terms of trends, while Korean consumers are seeking products with instant benefits in skin care, they are partial to natural ingredients and natural inspired formulations.


Right now, local players like skinfood, TonyMoly and Innisfree are seeing success with “natural” ranges and this demand is expected to continue.


If one of these international cosmetics start-ups can hustle to carve out a place for itself amidst the many beauty offerings in this sector, there’s an abundance of opportunity to tap into.


Seoul is less than two hours from Beijing, Shanghai and Tokyo by plane and Southeast Asia is also within easy reach—ideal for cross-border e-commerce.


According to the Korea Customs Service, cosmetics exports were worth more than $2.64 billion in 2015 with Thailand, Singapore and Vietnam leading the way in demand.


The European Union also has successful broker-free trade agreements in place in Singapore, Vietnam, and Korea and is in talks with the Philippines and Indonesia.

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Michelle Yeomans
Email: [email protected]

Michelle Yeomans is an award winning multimedia journalist. She has been reporting on cosmetics industry movements in EMEA, US and Asia for five years and has won an award for her coverage of the complexities of operating in the Middle East. Michelle’s passion lies in tracking the beauty culture and trends of the Asia Pacific region. Ever the AV enthusiast, she also relishes the opportunity to create engaging video and podcast content for the B2B industry.