COSMAX, the global No. 1 cosmetics ODM (original design manufacturer), is aiming to reach 3 trillion won in sales next year on the back of a renewed push by its China subsidiaries. COSMAX, which is building a Smart Factory and an R&I (research and innovation) center in Shanghai, plans to expand production capacity (CAPA) in China and strengthen its competitiveness in new product development. As the Chinese government recently announced plans to foster the cosmetics sector into a 100 billion yuan (about 21 trillion won) consumer market, COSMAX is expected to see more order opportunities.
According to the industry on the 15th, COSMAX recently announced a plan to enhance corporate value and presented sales targets for the next three years at 2.9712 trillion won in 2026, 3.3479 trillion won in 2027 and 3.6975 trillion won in 2028. The company aims to achieve an average annual sales growth of 12% and maintain an operating margin of around 8%.
To that end, COSMAX plans to build a Smart Factory with global-level production capacity and establish a world-class laboratory to secure top-tier R&I capabilities. At the same time, it said it will focus on securing volumes from global indie brand clients and strengthen its OBM (original brand manufacturing) business, which directly designs customers' product branding.
The Smart Factory and laboratory are being built in Shanghai, China. COSMAX paved the way for its China business by establishing a subsidiary in Shanghai in 2004, the first in Korea's ODM industry. In 2010, it founded a new subsidiary, COSMAX Guangzhou, and has since developed its business with Shanghai and Guangzhou as two hubs.
In 2023, it established a joint venture and built a plant with Yatsen, China's No. 1 cosmetics company. COSMAX currently operates four production facilities in Shanghai and three in Guangzhou, securing an annual CAPA of 1.49 billion units. It has also secured more than 1,000 clients in China and maintains relationships with eight of the country's top 10 local beauty brands.
Marking the 20th anniversary of its entry into China last year, COSMAX unveiled a blueprint to invest 130 billion won to build a new headquarters in Shanghai and secure new production and research facilities. The new headquarters, to be built on a 13,000-square-meter site in the Xinzhuang Industrial Zone with a total floor area of 73,000 square meters, will integrate research, production and marketing functions, with completion targeted for the second half of next year. Once completed, COSMAX's CAPA in China will increase to about 1.6 billion units.
The business environment surrounding COSMAX remains favorable next year. The popularity of K-beauty in the United States, which has emerged as a key export market, continues, and cosmetics exports to Europe are also on an upward trend.
The China market, where COSMAX is concentrating its efforts, has also laid the groundwork for a leap forward as the government signaled active support for the cosmetics industry. On the 27th of last month, the Chinese government said it would foster mega consumer markets in 13 sectors to address prolonged sluggish domestic demand and supply-demand imbalances in consumer goods, and it announced a plan to nurture the cosmetics market to 100 billion yuan (about 21 trillion won) by 2027.
Some also say that deepening economic and cultural tensions between China and Japan could open additional order opportunities for COSMAX. Park Hyun-jin, an analyst at Shinhan Investment & Securities, said, "China's 'limit-Japan order' will soon help boost the competitiveness of Chinese domestic brands," adding, "Korean ODM firms with production subsidiaries in China could benefit."
COSMAX posted sales of 1.7978 trillion won and operating profit of 154.9 billion won through the third quarter of this year. Compared with a year earlier, sales rose 11.8% and operating profit increased 14.2%. Brokerage estimates for cumulative results for the full year from the first to the fourth quarter came to sales of 2.4051 trillion won and operating profit of 200.5 billion won.
The outlook for its China subsidiaries is also bright. According to Meritz Securities, COSMAX's China sales, which were 574.4 billion won last year, are estimated to gradually increase to 615.4 billion won this year and 688.6 billion won next year.
An industry official said, "There are ODM companies in China as well, but as development lead times at major cosmetics companies have lengthened, there is a trend of placing orders with COSMAX," adding, "Utilization rates at local plants are also improving rapidly."