New facility in Osan will be jumpoff for transformation into global cosmetics company, says CEO


OSAN, Gyeonggi Province ― Amore Pacific, Korea’s largest cosmetics maker, said Wednesday it plans to nearly triple its annual sales to 11 trillion won ($9.35 billion), including 5 trillion won from overseas, by 2020 through aggressive global expansion and improved supply chain management.

“We aim to grow into one of the world’s top seven cosmetic companies by 2020,” Amore Pacific’s chief executive Suh Kyung-bae said in a press conference at the company’s newly-built production and supply base in Osan, Gyeonggi Province.

“We plan to foster 10 brands with annual sales of over 50 billion won each to increase our revenue to 11 trillion won, up from 3.9 trillion won last year.”

To achieve this goal, Amore Pacific, which ranked 16th in global sales in 2010, said it will raise customer accessibility by sharing production information throughout the entire supply chain including partner firms and securing stable supply through accurate prediction of demand.

It also plans to establish a quality-oriented process to roll out products that meet its sustainability standards and seek technological convergence to develop innovative products, according to Shim Sang-bae, the company’s head of supply chain management.

In terms of marketing, Amore Pacific said it will carry out customized brand strategies for each market.

In China, its main growth market, the company plans to tap into door-to-door sales, road shops, online sales and mail orders in addition to sales in department stores. It is building new production and research facilities in Shanghai.

“Sales in China have grown more than 30 percent each year and our profitability has been in double-digits,” Suh said.

“The number of people who use cosmetics in China has surpassed 100 million and is likely to double in the next two to three years. There are also major growth opportunities in the ASEAN region.”

The company aims to become one of the top three cosmetics makers in China with 3.4 trillion won in annual sales by 2020.

It targets sales of 1.3 trillion won in the rest of Asia including Indonesia, the Philippines, Thailand and India in 2020.

“Growth of our business in Europe has slowed down with the fiscal and financial crisis in the region, but we are still making profits. We will continue to learn from advanced markets such as in Europe and North America, and use the knowhow in other regions,” the CEO said.

The company said it will continue to review the timing of its entry into South America and the Middle East.

By 2015, Amore Pacific hopes to reach a global market share of 2.7 percent and become one of the world’s 10 largest cosmetics companies. It targets a market share of 3.8 percent worldwide in 2020.

The new “Beauty Campus” in Osan will be “the starting point of our growth into a global company,” Suh said.

“Here, based on cutting-edge technologies, we will pursue absolute quality that sets global standards.”

The new facility is an integrated version of production units for skincare and makeup products as well as distribution centers which were previously scattered in five different regions.

It has an annual production capacity of 15,000 tons, uses photovoltaic modules to cut greenhouse gas emission and a chilled water storage system to save energy.

The 224,000-square-meter site, the size of nearly 30 soccer fields, also hosts various sports and welfare facilities for employees and houses a botanical garden where plants used as materials for cosmetic products are grown.

By Kim So-hyun (sophie@heraldcorp.com)