As overseas demand for K-beauty products surges, cosmetics original design manufacturer (ODM) companies are accelerating the expansion of their domestic production bases. In particular, as preference for "made in Korea" cosmetics grows, domestic plants are reemerging as key hubs for export response, separate from overseas factories in China and the United States.
According to the industry on the 21st, Kolmar Korea will shut down operations at its Beijing plant in China in the first half and invest about 170 billion won to expand its Sejong plant. Production in China will be consolidated at the Wuxi plant, with the aim of significantly expanding domestic production capacity.
The Sejong plant serves as the headquarters for Kolmar's production bases worldwide. It manufactures products for more than 4,500 clients at home and abroad, and when it was completed in 2014, it was built as the largest single plant in Asia. The site can produce 890 million units of basic skincare products annually. Kolmar Korea's sunscreen products, a strength for the company, are also all made at the Sejong plant.
Early this year, Kolmar Korea pursued business streamlining by bringing the cosmetics manufacturing business, which had been dispersed at Kolmar BNH, under the Kolmar Korea structure. Kolmar Korea acquired 97.9% equity in mask pack maker Kolmask, previously owned by Kolmar BNH, for about 22 billion won. In addition, the cosmetics manufacturing business institutional sector run by HNG, a subsidiary of Kolmar BNH, was transferred to Kolmar UX, an affiliate of Kolmar Korea, for 22.4 billion won. Kolmar BNH, which has strength in health functional foods, will focus on its core business, while concentrating cosmetics ODM capabilities at Kolmar Korea to boost efficiency in production, quality control, and customer response.
COSMAX also plans to invest 60.5 billion won to expand its plant in the Goryeom Industrial Complex in Pyeongtaek by October. The goal is to preemptively increase production capacity to respond to growing global demand for K-beauty.
COSMAX has secured annual domestic production capacity of about 1.124 billion units with Hwaseong and Pyeongtaek as two pillars. In Pyeongtaek, after completing a logistics center in 2017, it launched Plant 1 focused on skincare products in 2019, and began operating Plant 2, which specializes in color cosmetics, in 2024.
Cosmecca Korea also expanded its domestic production capacity by bringing a new Cheongju plant online last year. The new plant has annual production capacity of 66 million units. Of 15 production lines, four are dedicated hydrogel mask lines to meet demand for mask packs that are popular overseas.
C&C International is building a new plant in Cheongju with an investment of 79 billion won. The new plant is more than six times larger than the combined sites of C&C International's existing Hwaseong and Yongin plants in Korea. After completion in September next year, annual production capacity is expected to increase by 1 billion units from the current level to 1.45 billion units.
According to the Ministery of Food and Drug Safety, Korea's cosmetics exports in the first quarter rose 19% on-year to $3.1 billion (about 4.64 trillion won), the highest for any quarter on record. Following last year's all-time high annual cosmetics exports of $11.43 billion (about 17.13 trillion won), exports have continued to climb this year.
Amid this trend, even though domestic ODM companies have overseas production bases, they are expanding domestic plants due to preference for "made in Korea" products. Overseas buyers highly rate the formulation development and quality control capabilities of Korean cosmetics, and domestic production capacity is said to directly translate into order-winning competitiveness.
An industry official said, "Overseas subsidiaries of ODM companies mainly serve local clients, and K-beauty still tends to favor products made in Korea," adding, "More client companies are focusing not just on the fact that it is a Korean brand but also on whether the actual production site is in Korea."
Domestic results at major ODM companies are improving rapidly. COSMAX's first-quarter sales at its Korea unit were 423.2 billion won, up 17% on-year. During the same period, Kolmar Korea's domestic sales rose 25% to 343 billion won. Cosmecca Korea's first-quarter sales at its Korea unit jumped 91.3% to 142.2 billion won. C&C International's first-quarter sales also increased 7.4% on-year to 70.8 billion won.