In 2017, Unilever spent 2.27 billion euros to acquire most of skincare products maker Carver Korea, buying out stakes held by Goldman, Bain Capital and founder Lee Sang-rok. Lee, 45, is worth $900 million, according to the Bloomberg Billionaires Index.
In October, Credit Suisse Group bought a roughly 3 per cent stake in L&P Cosmetic Co., the maker of Mediheal mask sheets, for about 40 billion won (NZ$52 million).
South Korea, a quarter the size of Japan, was the world's sixth-largest cosmetics exporter in 2017, according to the Korea Trade-Investment Promotion Agency. The country logged US$4.6 billion of exports for the first nine months of 2018, a 31 per cent increase from the same period a year earlier, driven by demand from China.
Kim started his career in the beauty industry selling cosmetics to wholesalers in China and established his own brand, JM Solution, in 2016. It took off from the start, gaining popularity on Alibaba's flagship e-commerce platform, Taobabo.
Then geopolitical tensions struck Korea's beauty market.
In 2017, South Korea allowed the US military to install the Terminal High Altitude Area Defense system (Thaad) to counter North Korean nuclear threats. Beijing interpreted that as a move against its own security interests, and state-run news outlets urged boycotts of Korean products.
In the heat of these tensions, GP Club took advantage of its position as a relatively smaller and newer brand.
"We were obscure at the time, so we suffered less than other big brands," Son said. "The key to pulling ahead of the competition was extending sales channels while others were slowing down."
The company introduced a new product, the Honey Luminous Royal Propolis Mask, and expanded into Korean duty-free shops. GP Club's lower prices attracted so-called daigou shoppers - people buying products for clients in mainland China, where access to foreign goods is limited and prices are higher.
GP Club defied the rout and sales continued to grow, increasing to 9.5 million mask sheets in December 2017, and a record 100 million sheets in August 2018. Revenue surged to 300 billion won in the first half of last year, up from 50 billion for all of 2017, according to Son.
That got Goldman's attention.
"It was uncertain which brand would advance after the Thaad issue, and we had conspicuous growth," Son said.
China has since relaxed its restrictions, including one against groups travelling to Korea.
In South Korea, self-made fortunes are uncommon. Of the world's 500 richest people, only two of seven Korean billionaires are self-made, according to the Bloomberg wealth index. Family-run business conglomerates, called chaebols, have diversified across industries, leaving little room for self-made competitors. The beauty industry has been the exception.
At Incheon International Airport, the first things that draw travellers' attention after entering the country are big TV screens showing product commercials of these less-known cosmetic companies, rather than Samsung or other prominent names.
"Large companies have more money and better infrastructure, but the cosmetics business requires more than that," said Lee Jin-wook, founder of Have & Be Co. Ltd., whose most popular brand, Dr Jart+, sells creams and face masks online and in retailers like Sephora. In 2015, Estée Lauder Cos. acquired a stake in Have & Be for an undisclosed sum.
"It's an area for specialists," Lee said.
- Bloomberg
