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Korean cosmetics run deep in CEO's blood

Kwon Oh-sub, CEO of L&P Cosmetic, largely known for its popular facial masks, poses with his products at the company office in Gangseo-gu, western Seoul. / Korea Times photo by Shim Hyun-chul
L&P Cosmetic plans to expand overseas presence

By Kim Ji-soo,  THE KOREA TIMES

A facial mask brand stands out among the millions of so-called K-cosmetics sold at drug stores and duty-free shops all over Seoul. That it is promoted by celebrities like Hyun Bin, a hallyu star, and Fei, the Chinese member of girl band missA, on television and other media makes it hard to miss.

Customers, especially Chinese tourists, swarm duty-free stores to buy Mediheal masks. Made by L&P Cosmetic through partnership with factories, the masks come in about 120 types and are priced between 2,000 won and 3,000 won. The masks, known for moisturizing and other effects, have taken off here and abroad. Exports to some 25 countries account for 55 percent to 60 percent of the company's sales, while 70 percent of the overseas sales are attributed to the Chinese market.

Until recently, facial masks were not popular in Korea. While Japanese companies started promoting them earlier, they were considered a complementary item in Korean women's multi-stage beauty routine.

L&P Cosmetic CEO Kwon Oh-sub said his company succeeded in carving out a niche for higher-end masks, at a time when other companies were offering them as promotional gifts or selling them cheaply at 1,000 won for pack of three or more.

"I think the facial mask is part of progress in Korean cosmetics, from the BB cream several years ago to the air cushion makeup and now the facial mask," he said. He also credits the company's growth to the success of such products as the N.M.F Aquaring Ampoule mask and W.H.P. White Hydrating charcoal-mineral mask. "Especially in China, where the N.M.F was known as the ‘moisture' bomb," he said.

Since its founding in 2009, the company has sold 790 million masks as of the end of last year. Last year, it posted 400 billion won in sales, up from7.5 billion won in 2012. Its facial mask packs are one of the bestsellers on the No. 1 Chinese online mall www.taobao.com. And as news of its plan to go public this year spreads, there is anticipation about the company's future and stock price.

"For me, every mask sold is valuable. One consumer's choice is everything for us," Kwon said. The company's soaring sales are also an affirmation of the positive outlook for the "fast cosmetics" trend, which he has been promoting.

Selling cosmetics is selling a part of Korean culture.

"Our company introduces three to four products every month. I call this ‘fast cosmetics.' Where in the world can you find such fast cosmetics trend? This is in line with the Korean people's nature," he said, referring to the country's "palli, palli" or "hurry, hurry" culture. "Also, people no longer have to take the trouble of making their own masks at home," he said.

Kwon likened himself to the green frog in the Korean fable who disregards what others tell him. That personality trait reflects, in part, his way of doing business in the K-beauty industry.

"I like doing things others shy away from," Kwon said. "I also do not like to do things that others do." In 2015, he opened a flagship store in Myeongdong, downtown Seoul, when others were pulling out from the area.

The cosmetics business runs deep in his family. From 1969 through 1987, his mother ran Wang Saeng Cosmetics, which produced the country's first hair mousse. After studying geology at the undergraduate and graduate levels at Korea University, Kwon, the second son and the youngest child of three, entered the family business.
 
An array of facial masks under the Mediheal brand produced by L&P Cosmetic. / Courtesy of L&P Cosmetic

After running two businesses — the first one of which failed and the second one which achieved modest success — Kwon founded L&P Cosmetic in 2009.

Asked whether he thought he would hit it so big with his third company, Kwon said no. But he believes his first two businesses, laid the foundation for L&P Cosmetic.

"In the early 1990s, I named my cosmetics company Kospi Club with the aim of setting the standards for the cosmetic industry," he said, adding that it was a premature attempt at a franchise business in Korea. "I learned if that you move too quickly, you are doomed," he said jokingly. He poured three billion won of his own money and one billion won from investors into the company, which failed around the time of the Asian financial crisis.

"I learned humility, that I have to work along with my employees, my partner companies," he said. Up until then, he said he had never experienced failure. "I was full of pride, vanity," Kwon said. He looked back and said he failed to take others into consideration when his business was doing well. "I don't want to blame it on the Asian financial crisis."

The K-cosmetics veteran sees the industry change every decade. Before the 1980s, cosmetics saleswomen visited homes to sell their products. He said LG Household and Health Care entered the market in 1983 and launched a series of shops. In the 1990s, the Koreana brand surged, and in the 2000s one-brand shops like Missha and Faceshop prevailed. Now, beauty retailers such as Olive&Young, LOHB and Watson's are succeeding.

The cosmetics industry is here to stay, and he has some ambitious plans for his company.

This summer, around July, L&P Cosmetic plans to go public. It also has plans to enter the makeup market, expand to Japan and increase its growth in China.

He did not deny the potential negative implications of the South Korea-China conflict over the Terminal High Altitude Area Defense (THAAD) battery deployment.

His company is making step-by-step preparations to help overcome any possible challenges.

Asked about lessons he learned from his mother, he recalled how his mother, when she was running Wang Saeng in the late 1960s and 1970s, ran a "gye" (a traditional Korean private-funding club) among merchants in the Namdaemun and Dongdaemun markets. He tagged along with his mother and saw how she worked together with her affiliates. "I saw that in business, you have to work together, that you are working with people," he said, explaining that his mother's approach drives his company's focus on sales and marketing. L&P Cosmetic sales staff work full time as a way to maintain its focus on sales and marketing. "You could attribute about 20 percent of a store's sales to the staff," Kwon said.

The CEO believes that in this day and age, companies like his cannot afford to both manufacture and market products. "We have a lot of excellent ODM, OEM companies. We all should have respective strengths, and ours is sales and marketing," he said.

Instead of building factories, he jointly invests in manufacturers such as Kolmar and Cosmax, the top two OEMs in the country. He has no plans to build factories outside Korea.

Kwon has maintained this strategy despite the difficulty of having to doubly persuade would-be buyers how his company remains competitive without its own factories. "I want my company to be like the Nike of Korean cosmetics," he said.

A smoker, but only at the office, Kwon likes to play cards and is into baseball and music. He spends his weekends thinking about strategy, which sometimes drains his energy. Yet he presses on. He said he came to his senses after his first business failure, after which his son asked him whether he can continue attending extra-curricular schools.

His weaknesses?

"I am quick-tempered, I must admit," Kwon said, smiling, "but if the sales go okay, nothing is problematic," he said.

The humility he learned from his past business failures tempers his aggressive business style, his quick-temper and his fiery personality. As the chief of a medium-sized company, he makes sure to delegate to his employees, because he believes giving his full-time employees a sense of ownership helps the company.

As the company expands, the CEO interviews candidates for executive positions himself. "I look at how that person grew up and what that person says in the job interview. You might say it is a skill of mine," he said.

A devout Christian, he has donated 12 billion won to his alma mater, and last year, set up the religious and charitable foundation, Mediheal Foundation.

His goal? "There are still markets untapped galore, such as Southeast Asia, the U.S., Europe and others," he said. "I hope to hear that the second son of Wang Saeng's founder has done well."