May 03, 2024

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[THE INVESTOR] The numbers say it all: cosmetics is hot right now in Korea, soaring above the country’s struggling traditional sectors that include manufacturing, shipbuilding, electronics and construction.

Behind the success of Korea’s booming cosmetics industry stand two men who made it all happen: Suh Kyung-bae, the 53-year-old head of leading cosmetics company AmorePacific, and Cha Suk-yong, 63, of rival LG Household & Healthcare.
 

AmorePacific CEO Suh Kyung-bae (left) and LG Household & Healthcare CEO Cha Suk-yong

The two companies have major differences. AmorePacific is almost exclusively a cosmetics company while LG H&H holds a more diverse product portfolio including beverages and household detergents. However, both companies battle aggressively with each other in the cosmetics market.

On the premium level, AmorePacific’s Sulwhasoo faces off against LG H&H’s The History of Whoo, especially among Chinese shoppers. Both brands tout a luxury image based on traditional Korean medicinal ingredients. 

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At a lower price range, AmorePacific’s Innisfree and LG H&H’s The Face Shop vie to capture the hearts of youthful consumers by emphasizing fresh, natural ingredients promoted by hallyu stars.

Despite the similarities, Suh and Cha have vastly different backgrounds.

Suh was born the second son of Suh Sung-whan, who founded Pacific Chemical Industries, the predecessor of AmorePacific. As the second son, Suh was not the chosen heir from the start.

But it was he who, after completing a business education at Cornell University, proved his merits when his father’s company nosedived in the face of competition from foreign cosmetics brands flooding the Korean market. 

As the owner and an executive of the company, Suh has brought consistent leadership to AmorePacific in terms of its core identity as an “Asian Beauty Creator,” and that consistency is often credited for making AmorePacific’s rapid rise possible, coupled with Suh’s incontestable majority stake in the group.

Last year, AmorePacific saw a 20 percent increase in sales to hit 5.6 trillion won ($4.89 billion)

Cha’s story is different, as his path was something of a salaryman’s dream, rising through the ranks on merit rather than family connections to ultimately become the vice chairman of LG H&H.

Cha joined LG H&H in 2005 after holding leadership positions in various companies including Proctor & Gamble and Haitai Confectionery & Foods.

Since then, he has improved the profitability of then money-losing LG H&H through aggressive mergers. The acquisition of The Coca-Cola Beverage Company in 2007 put the company back in the black and opened up the company’s beverage sector. This was followed by the acquisition of companies including The Face Shop Co., which expanded the company’s cosmetics business.

Graphic by The Korea Herald

The diversification seems to be working: Last year, LG H&H enjoyed its biggest sales record in its history, reaching 5.33 trillion won. Operating profit for its cosmetics sector soared 43 percent last year.

The outlook looks rosy for LG H&H’s cosmetics, especially with its recently launched Sum 37 brand that is performing well among key Chinese shoppers. This means that Cha is expected to pour more energy and resources into this segment of the business.

Despite AmorePacific’s current lead in cosmetics, LG H&H is fast closing the gap – hinting that the rivalry between the two men is worth watching in the coming years.

By Won Ho-jung (hjwon@heraldcorp.com)