Strong demand for K-Beauty has CJ Olive Young expanding to “significant” Japanese market

14 May 2024 --- South Korean beauty retailer CJ Olive Young is expanding its global footprint by establishing a subsidiary in Japan by June to supply its cosmetics products to local distribution channels. The company considers Japan a critical overseas market, alongside the US.

According to reports, the corporation plans to open an office in Japan within the first half of the year to meet the growing demand for its skin care and beauty products among Japanese customers. 

The expansion follows product sales of CJ Olive Young’s own brands, such as Bioheal BOH, WakeMake and BringGreen, increasing an average of 125% annually from 2020 to 2023. In the year’s first quarter, the brands’ product sales jumped 76% from the prior year. The company is set to supply these products directly to local distributors in Japan.

Japanese expansion
CJ Olive Young has not confirmed plans to open a directly managed offline store in Japan. The company sells its products online without retail stores in global markets.

It notes that Japanese consumers exhibit consumption patterns similar to Koreans, with a growing affinity for K-beauty products. This cultural and market alignment gives it the opportunity to duplicate the company’s success in Japan.

CJ Olive Young began exporting its private brand products to Japan in 2020, demonstrating the region’s potential. 

CJ Olive Young eyes Japan for increased sales.In 2023, the company’s sales rose 39% on-year to ₩3.8 trillion (US$2.77 billion), aided by overseas sales.

“The K-beauty industry recently grew with the country’s small-to-medium-size companies and indie brands,” a company official told The Korea Times. “Our global market expansion will allow the SMEs and indie brands we curate and sell to promote themselves to broader global regions.”

LVMH’s Sephora announced its gradual withdrawal from South Korea, starting May 6, due to competition from popular CJ Olive Young.

Asian beauty markets
Over the past five years, the Asian beauty landscape has continuously transformed, Innova Market Insights reveals. “Between October 2022 and September 2023, Lip Cosmetics took center stage, dominating the new product launches,” spotlights the global market researcher.

The Asian beauty market is currently worth US$244.4 billion and is expected to grow at a compound annual growth rate of 3.54% from 2023 to 2028, according to shopping platform Alibaba.

Chinese President Xi Jinping’s first French tour in five years ignited discussions surrounding the future of trade relations between the two nations, particularly in light of stricter Chinese rules on French cosmetic products like lipstick and fragrances.

French beauty businesses hoped the talks between Xi Jinping and Emmanuel Macron will alleviate Chinese import regulations regarding the exchange of formulas and manufacturing knowledge.

Additionally, in its third quarter of fiscal 2024, Estée Lauder Companies attributed a 6% organic net sales increase to double-digit growth in Europe and the EMEA region, driven by more robust sales in Asia travel retail.

By Sabine Waldeck