Amorepacific revamps overseas operations targeting North America, Europe

[Courtesy of Amorepacific Corp.]

Amorepacific Corp. is stepping up its global business restructuring, replacing key heads of overseas subsidiaries, expanding offline stores, and seeking mergers and acquisitions to reduce its reliance on China and refocus on high-growth markets in North America and Europe.

According to industry sources on Sunday, Amorepacific has appointed a new head for its European subsidiary, effective July 1, marking the first leadership change in the region in three years.

Last month, the company replaced the heads of its subsidiaries in China, North America and Japan to reassess the regional business and secure new growth opportunities.

Since the Covid-19 pandemic, the company has been hit by a slump in the global consumer market, resulting in a decline in overseas sales in the first quarter for the third consecutive year.

Last year, during the 78th anniversary celebration, Chairman Suh Kyung-bae emphasized the need to continue challenges in new markets with high potential and growth, such as North America and Europe, while commenting on a much-needed recovery in the Chinese market and growth in other Asian markets.

In the first quarter, the Greater China region—including the mainland, Taiwan and Hong Kong—accounted for approximately 44 percent of Amorepacific‘s overseas sales, more than North America (26 percent) and Europe (5 percent) combined.

Sales in China alone were estimated at about 35 percent, about half of the 66 percent in the first quarter of 2021.

Amorepacific has been working to reduce its reliance on the Chinese market, as its overseas sales performance has been sluggish since the conflict triggered by the deployment of the U.S. missile defense system in Korea in 2017 and the impact of Covid-19 in 2020.

The company is shifting focus to growing markets in Europe and North America.

[Graphics by Song Ji-yoon and Chang Iou-chung]

In the first quarter this year, the greater China region sales dropped by 19.3 percent year-on-year, while Americas and Europe grew by 40 percent and 52 percent, respectively, boosted by Korean pop culture’s influence on cosmetics demand.

Amorepacific plans to expand local presence for key brands like Laneige and Innisfree, ramp up marketing, and launch new products.

Laneige, which doubled sales last year following its entry to the U.K. and Middle East with a focus on lip and skincare products, aims to penetrate Europe further with new mask releases and enhanced marketing in beauty stores.

In Japan, strategic partnerships with local distributors are being reinforced while refining the business structure to revive performance in China.

Moreover, Amorepacific is actively investing in new businesses through acquisitions of small and medium-sized enterprises.

In 2021, it acquired domestic skincare company COSRX Inc., known for its popularity in North America with sensitive skin products like skin pads.