Korea's stationery corporations Monami and home appliance corporations Coway are struggling to gain traction in the cosmetics business. With losses continuing for years, observers say competition is too tough to stage a quick turnaround. Monami and Coway each plan to boost results through staffing increases and marketing.
According to a compilation of ChosunBiz reporting on the 22nd, Monami Cosmetic, which Monami established for its cosmetics business, will add staff and push to advance its business next year. It will hire people with experience in original design manufacturing (ODM) and original equipment manufacturing (OEM) and invest to develop formats for lip color cosmetics.
Monami holds the highest market share among domestic stationery corporations, but its operating margin is only 1%–2%. Last year, Monami posted about 94.7 billion won in separate sales, but operating profit was only 934.49 million won. Its market share, which once reached 50%, has recently fallen to 42%, making it inevitable to seek new growth engines.
Seeking a way forward, Monami set up Monami Cosmetic in 2023. Leveraging blending technology and injection mold design capabilities accumulated from making writing instruments, it jumped into the cosmetics OEM and ODM business. However, it posted a loss of about 3.1 billion won in the first year and recorded a loss of about 4.4 billion won last year. In just the first half of this year, it incurred a loss of about 2.2 billion won.
Monami achieved about 47.1 billion won in sales and about 1.1 billion won in operating profit in the first half of this year, but on a consolidation basis with subsidiaries such as Monami Cosmetic, it recorded about 65.3 billion won in sales and an operating loss of 2.3 billion won. Losses were large at overseas subsidiaries as well as at Monami Cosmetic.
Coway's cosmetics subsidiary Hillerby is in the same situation. Hillerby started in 2021 as a joint venture between Netmarble and Coway. It launched the brand V&A Beauty and signed a trademark licensing agreement with the Victoria and Albert (V&A) Museum in the United Kingdom. It also drew up plans to evolve into a beauty and health platform that provides personalized solutions by integrating IT technology owned by Netmarble.
But as the business slumped, Coway in May last year partitioned off its cosmetics division and absorbed Hillerby into a newly established separate corporation, RnK B&H. It is currently operating under the name Hillerby Co., Ltd.
In the first year of its relaunch last year, it posted an operating loss of about 2.2 billion won. It also recorded a loss of 600 million won in the first half of this year. Before the merger, Hillerby recorded losses of 18 billion won in 2022 and 12.1 billion won in 2023. As of the end of last year, it had borrowed about 33.1 billion won from Netmarble and Coway, and in March and August this year it raised an additional 9.5 billion won and 6.2 billion won from Coway for operating funds.
Despite years of losses, Monami Cosmetic and Hillerby are seeking a turnaround in next year's business. Monami Cosmetic is said to be planning to add staff and make a leap in the cosmetics business.
An official said, "Although we hired new staff this year, many have also resigned," and added, "We are looking for industry veterans to get the business on track."
A Hillerby official noted, "As we have refreshed the brand to Re:NK and restarted with new product launches, we plan to expand marketing and increase contact points with consumers."
They are pinning hopes on rising demand for cosmetics overseas alongside the popularity of domestic content. However, with many established players and mid-sized corporations with financial clout entering the market, competition is intensifying, and it is uncertain whether the situation can be reversed.
An industry official explained, "As of last year, the number of cosmetics responsible sellers capable of contract manufacturing was 27,932," adding, "Competition among domestic companies overseas is also intensifying."