COSMAX is considering establishing a local factory to secure competitiveness in Europe. Until now, domestic ODM (Original Design Manufacturer) companies have expanded their production facilities mainly in China, Southeast Asia, and the United States. If COSMAX secures a production facility in Europe for the first time, it is expected to significantly enhance its local supply capacity and achieve cost competitiveness.
According to the securities and distribution industry on the 21st, Lee Kyung-soo, chairman of COSMAX, noted during a meeting with securities analysts held the previous day at the COSMAX headquarters in Pangyo that he plans to establish a factory in Europe next year.
If COSMAX secures a factory in Europe, the total number of countries where it has production facilities will increase to six. Currently, COSMAX has production plants in Korea, China (Shanghai and Guangzhou), the United States, Indonesia, and Thailand, producing approximately 3.3 billion products annually. It is also working on the construction of a factory in Japan.
While the country where the factory will be established in Europe has not yet been determined, industry observers suggest that France, known as a traditional beauty powerhouse, is a strong candidate. COSMAX established a sales office in France earlier this year.
There is a high possibility that the factory will be pursued in the form of a joint venture with a local beauty company. COSMAX already has experience establishing production facilities overseas in a joint venture format. In 2020, it created a joint venture with Yatsen Group, a Chinese color cosmetics specialist, and has been operating a factory in Guangzhou since 2023.
COSMAX is also seeking to enhance its production capacity through the expansion of existing overseas corporations. Its Chinese subsidiary, COSMAX China, has been constructing a new building that includes production facilities, commemorating 20 years since entering China, since last year. The Thai subsidiary commenced construction of a new factory to secure additional production capacity starting in April this year.
Last month, COSMAX laid the groundwork for its entry into Europe by signing a strategic partnership agreement with Eurofins, a clinical institution in France, in the field of cosmetic clinical trials. Established in 1987, Eurofins operates over 950 laboratories worldwide and provides clinical services across food, environment, pharmaceuticals, and cosmetics.
Eurofins provides clinical, analytical, and microbiological testing, particularly in the cosmetics sector, and supports various customer needs with customized solutions. COSMAX has stated that "by entering into this partnership, it plans to leverage Eurofins' global infrastructure and expand interactions with clinical institutions in Europe."
According to the Ministry of Food and Drug Safety, the export volume of cosmetics from Korea in the first half of this year was $5.51 billion (approximately 7.7 trillion won), marking a 14.8% increase compared to the first half of last year, setting a record high. Notably, a sharp increase was observed in the European region. Exports to Poland in the first half of the year totaled $150 million (approximately 210 billion won), an increase of 133.8% compared to the same period last year. Exports to the United Kingdom ($100 million or approximately 140 billion won) and France ($70 million or approximately 98 billion won) also rose by 46.2% and 116.1%, respectively.
COSMAX reported sales of 1.2122 trillion won and operating profit of 112.1 billion won in the first half of the year. These figures represent increases of 12.4% and 21.7%, respectively, compared to the same period last year, marking the highest performance in history.
A COSMAX official commented, "Europe is a region symbolizing the home of cosmetics. Interest in K-beauty has also been growing in Europe lately," and added, "If we can establish production facilities in Europe, we believe opportunities for collaboration with global brands will increase."
Lee Seung-eun, a researcher at Yuanta Securities Korea, said, "If COSMAX secures a production base in Europe, it can maintain cost competitiveness while expanding dependency on global major corporations' ODM and increasing orders from indie brands. This could reinforce both short-term performance rebounds and long-term growth stories."