As protests and boycotts against South Korean brands spread in China due to a political dispute between the two countries, cosmetics companies are hoping Chinese consumers won’t give up their elaborate K-beauty skincare routines in the name of nationalism. When it comes to online buzz in China, South Korean beauty brands have recently taken a hit, but growth remains higher than that of Western and Chinese counterparts.
South Korean retailers, cosmetics brands, and entertainment companies that rely on the China market have all been facing challenges from the controversy since it began in July, when South Korea announced that it would deploy a missile defense system called THAAD that is vigorously opposed by China. The Chinese government has been accused of a variety of economic retaliation measures including blocks on online access to South Korean TV dramas and K-pop music, denial of China visas to Korean performing artists, and pressure on travel agencies to stop selling South Korean tour packages. The Korean beauty (or “K-beauty”) industry has also been impacted: so far, there have been bans on imports of 19 South Korean cosmetics products officially under the guise of quality control.
But it’s difficult to suppress Chinese consumers’ interest in K-beauty: L2’s analysis finds Korean beauty brands saw 84% year-on-year Baidu Index growth in December 2016, a rate more than double that of Western, Chinese, or Japanese rivals. K-beauty interest did decline as the political dispute heated up in 2017, but it is still holding up relative to peers. Korean brands’ Baidu Index growth sunk in January to 25%, falling below Japanese brands. But even as Chinese outcry against South Korea grew in February, K-beauty made its way back up to 36%, and has stayed ahead of Western and Chinese brands during this entire time.
Retail giant Lotte is the South Korean brand that’s the main target of ire in China thanks to its decision to allow the South Korean government to use its golf course land to deploy THAAD. E-commerce platforms Tmall, Jumei, and JD.com have removed Lotte stores and products from their websites, while the company’s websites received a cyber attack last week that was traced to Chinese IP addresses. In addition, Chinese authorities have put 23 China-based Lotte brick-and-mortar stores under business suspension, ostensibly for a breach of fire regulations. Lotte’s duty-free business is especially vulnerable as it saw 70% of its sales come from Chinese tourists last year.
It is yet to be seen whether the boycotts will have the same impact on Korean brands that China’s anti-Japan boycotts of 2012 had on Japanese companies. Chinese state-run media outlet Global Times has warned that Chinese consumers “will not sacrifice the national interest for Korean cosmetics,” but they’re certainly still interested in looking these brands up online for now.