Chinese biggest consumers of Korean beauty products

By

Benjamin Fitzgerald

Published
Oct 20, 2016

China was the biggest consumer of Korean beauty products and cosmetics in 2015, receiving close to half of Korea's total beauty exports last year.

According to Korea Health Industry Development Institute information, 
Chinese buyers accounted for 41.1 per cent of South Korea’s cosmetics exports, a rise of 22.1 per cent compared to 2012.

The value of the exports also lifted considerably, from US$274.34 million in 2013 to $1.04 billion last year. The upward trend is likely to continue.

More recently, China introdueced new imported cosmetics tax cuts to boost the spirits of investors in Korean brands. On October 1, 2016 -- just in time for the Golden Week travel period -- the Chinese government cut the consumption tax on imported 'premium' cosmetics by half (from 30 percent to 15 percent) and completely removed the tax on 'mass-market' cosmetics from abroad.

Previously, the tax rate used to be a whopping 84 percent with the combination of import tariff, value-added tax (VAT), and consumption tax. Now, 'luxury' beauty products see a total tax rate of 51 percent, and regular items will be taxed 29 percent.

These tax cuts come at a time when Chinese consumers have been heading to nearby South Korea and Japan to stock up each nation's respective beauty products for significantly lower prices, compare to what they can get them for on the mainland.

The Korea Health Industry Development Institute report did say, however, that exports to China could suffer if the nation's capital Beijing and government powers restrict trade as as result of economic sanctions, following South Korea’s pursuit of a high-tech U.S. missile defence system.

South Korea announced in July that it would take on the Terminal High Altitude Area Defense (THAAD) system by the end of next year to counter growing threats from North Korea.

“There is concern over the Chinese government enacting indirect or direct economic sanctions and possible anti-South Korea sentiment in China,” said the institute.