South Korea’s cosmetics industry has enjoyed remarkable growth over the past two decades. Fueled by the global popularity of Korean culture, demand for K-Beauty products has surged, driving a sharp increase in exports. Beneath this success, however, lies a more complex reality. As geopolitical tensions between China and the United States intensify, the Korean beauty industry has been forced to adapt, exploring new markets and adjusting its strategies.
Over the past 20 years, China-U.S. relations have undergone significant changes. In the early 2000s, the relationship was largely cooperative, marked by the United States granting China permanent normal trade relations in 2000 and supporting its accession to the WTO in 2001. However, this dynamic began to shift as China’s economy expanded, making it the largest U.S. foreign creditor in 2008 and the world’s second-largest economy in 2010. As China’s global influence grew, competition between the two countries intensified. In 2011, the Obama administration popularized the term “pivot to Asia,” calling for increased U.S. attention to and investment in the region. This strategic recalibration accelerated under President Donald Trump’s “America First” policy, marked by a more confrontational stance toward Beijing and a costly trade war. Meanwhile, under President Xi Jinping, China asserted a more prominent global role, bolstered by economic success and a surge of nationalism reinforced by state-driven patriotic education.
Amid these evolving geopolitics, K-Beauty was experiencing unprecedented growth, with China emerging as the most significant market for South Korean cosmetics. In 2014, South Korea’s cosmetics exports exceeded imports for the first time, driven by the rapid expansion of the Chinese market. This growth was fueled by the cultural and geographical proximity between South Korea and China, as well as the rise of Hallyu (the Korean Wave). Notably, the tremendous success of the South Korean drama “My Love from the Star,” which aired in 2013, had a profound impact on Chinese beauty trends, leading to a surge in South Korean cosmetics exports to China in the years following the show.
However, the industry soon encountered geopolitical headwinds. The first major disruption came with the dispute over the Terminal High Altitude Area Defense (THAAD) system. In 2016, South Korea and the U.S. decided to deploy THAAD, a U.S. missile defense system, to address North Korean threats. However, China perceived this as a threat to its strategic security and retaliated by imposing unofficial sanctions on South Korean products, including cosmetics. The onset of the COVID-19 pandemic further disrupted trade, as lockdowns and strict restrictions hindered exports. In the post-pandemic period, China’s sluggish economic recovery, coupled with a surge in patriotic consumer behavior, has made the Chinese market increasingly challenging for foreign brands.
In response, South Korea’s cosmetics industry has actively recalibrated its export strategy. K-Beauty brands, especially smaller, independent labels, have diversified their market focus, turning increasingly to the United States and other regions. While major players were initially slower to pivot, indie brands capitalized on their affordability, product innovation, and savvy social media marketing to capture U.S. consumers. As a result, the United States has rapidly replaced China as a key export destination for K-Beauty.
South Korean cosmetics exports to China, which peaked in 2021 at 53 percent of total exports, have since declined sharply, falling to 24.5 percent in 2024. In contrast, the U.S. share climbed from 9 percent in 2021 to 18.6 percent in 2024. Simultaneously, exports to other parts of the world, such as Japan, Vietnam, and the UAE, are rapidly growing. In particular, K-Beauty has become increasingly popular among Japanese consumers. South Korea has remained the largest foreign cosmetics exporter to Japan for four consecutive years, with K-Beauty exports exceeding $1 billion for the first time in 2024.
Meanwhile, South Korea’s Original Design Manufacturing (ODM) companies have thrived by leveraging both the global success of Korean indie brands and ongoing partnerships with Chinese cosmetics firms. Leading ODM firms such as Cosmax and Kolmar Korea, known for their ability to produce products based on brand concepts within one to two months, have maintained agile supply chains. This has enabled smaller Korean brands to introduce affordable, trend-driven products quickly and competitively. At the same time, ODM firms have sustained partnerships with Chinese beauty brands, benefiting from a surge in patriotic consumer sentiment. This dual-market strategy has allowed South Korea’s ODM sector to remain resilient in China, even as flagship K-Beauty labels faced headwinds. Thanks to these adaptive strategies, South Korea’s total cosmetics exports reached a record high in 2024.
South Korea has skillfully balanced its dual commitment to a security alliance with the United States and deep economic ties with China. This balancing act has been instrumental in the rise of industries like cosmetics, which have long benefited from robust Chinese demand. While escalating China-U.S. tensions complicate this strategy, K-Beauty’s pivot toward market diversification and agile business models demonstrate how even sectors deeply integrated with China can adapt to shifting geopolitical landscapes. Looking ahead, K-Beauty’s ability to sustain its momentum will hinge on its capacity to replicate the adaptability and resilience it has demonstrated over the past decade.