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Korean Beauty ODM Shift: Top Three Manufacturers Ramp Up Capacity to Capture Global Skincare Market — BigGo Finance
Korean Beauty ODM Shift: Top Three Manufacturers Ramp Up Capacity to Capture Global Skincare Market
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South Korea’s three largest cosmetics contract manufacturers are simultaneously expanding skincare production capacity, reflecting a fundamental shift in K-beauty’s export structure. South Korea’s cosmetics exports reached $7 billion in the first half of this year, with basic skincare products accounting for 78% of the total. Kolmar Korea, COSMAX, and Cosmecca Korea are respectively reshoring production, expanding existing lines, and building new large-scale facilities to capture global skincare demand. Skincare offers a wider price range and greater product differentiation potential compared to color cosmetics, and Korean ODM companies’ higher R&D investment ratios relative to global peers, combined with shorter product development cycles, create competitive advantages. Meanwhile, Taiwan’s market is benefiting from the AI investment wave, with foreign investors buying a record NT$356.8 billion (approximately $11.2 billion) in Taiwanese stocks in August. PineBridge Investments expects Taiwanese corporate earnings growth to exceed 40% in 2026, with the medium-to-long-term bull market intact.
Key Elements
The Korean beauty wave continues to gain momentum, but the core of this growth has clearly shifted from color cosmetics such as lipsticks and eyeshadows to basic skincare products like lotions and serums. South Korea’s three largest cosmetics original design manufacturing (ODM) companies have recently announced successive expansions of skincare production capacity, reflecting the rapid surge in overseas demand for Korean skincare products and the unique advantages skincare offers in product development and pricing.
According to South Korea’s Ministry of Food and Drug Safety, the country’s cosmetics exports reached $7 billion (approximately NT$220 billion) in the first half of this year, up 27.3% year-over-year, setting a new record for the first half. Of this total, basic skincare product exports amounted to $5.48 billion (approximately NT$170 billion), accounting for a substantial 78% share and growing 25% year-over-year. In other words, nearly 8 out of every 10 Korean cosmetics products sold overseas are skincare items.
Three Major ODM Players Expand Simultaneously
South Korea’s Kolmar Korea is expanding its basic skincare production lines near its existing facility in Jeonui-myeon, Sejong City. The company previously withdrew from its Beijing plant in China and relocated that production capacity back to South Korea. After signing an investment agreement with Sejong City in March this year, it secured land for the new facility. Last month, South Korea’s Ministry of Trade, Industry and Energy designated Kolmar Korea as this year’s first reshoring company.
COSMAX has invested ₩60.5 billion (approximately NT$1.4 billion) since June to expand its Pyeongtaek Plant 1 in Pyeongtaek, Gyeonggi Province. The plant previously focused on color cosmetics such as lip tints and cushion compacts, but is now pivoting toward expanding basic skincare production capacity in response to global skincare demand growth. The data supports this strategic adjustment: COSMAX’s South Korean entity saw basic skincare revenue grow 41% year-over-year in the first quarter of this year, driven primarily by strong exports of hydrogel masks, sunscreens, and spray products. Skincare’s share of the company’s overall product mix jumped from 53% in the same period last year to 64%.
Cosmecca Korea is taking an even more aggressive approach. The company plans to invest ₩200 billion (approximately NT$4.7 billion) between 2026 and 2030 to build a new facility with a total floor area of approximately 59,000 square meters at the Ochang Scientific Industrial Complex in Cheongju, North Chungcheong Province. Construction began this month, with the first phase expected to commence production next year, followed by phased equipment expansion.
Why Skincare Is More Attractive Than Color Cosmetics
For ODM manufacturers, skincare and color cosmetics differ fundamentally in their business models. A cosmetics ODM industry insider noted that even for luxury brands, individual items like lipsticks, eyeshadows, and blushes rarely exceed ₩200,000 to ₩300,000 (approximately NT$4,700 to NT$7,100) in price. Skincare, however, can be developed into high-priced products based on ingredients and functionality, with market space ranging from ₩10,000 (approximately NT$240) affordable creams to premium serums priced at several hundred thousand won or more.
Color cosmetics also face production efficiency constraints. A single product style often requires manufacturing in multiple shades, and order volumes fluctuate sharply with fashion trends. In contrast, skincare can continuously create differentiation through research and development of raw materials and formulations. In recent years, natural-source ingredients such as centella asiatica and houttuynia cordata, along with functional ingredients like retinol, niacinamide, and PDRN, have taken turns becoming market focal points. An increasing number of brands are adopting raw materials or formulations developed in-house by ODM manufacturers, further strengthening the position of contract manufacturers in the value chain.
Data from Samil PwC Management Research Institute shows that COSMAX and Kolmar Korea invest approximately 5% to 6% of revenue in R&D, higher than the 2% to 3% of global ODM peer Intercos. Their product development cycle from planning to launch averages just 3 to 6 months, far faster than the global average of 9 to 12 months. A representative from the research institute stated that the core of K-beauty exports remains in basic products, with soothing, skin barrier strengthening, and whitening functionalities, along with ingredient trust, serving as growth engines. Korean ODM companies are building competitive advantages through ingredient and formulation innovation, rapid delivery times, and cost efficiency.
Taiwan’s AI-Driven Capital Inflows Gather Momentum
Meanwhile, capital momentum in the Taiwanese market is also being propelled by the global artificial intelligence (AI) investment wave. PineBridge Investments noted that Taiwanese stocks rebounded strongly in August, with foreign investors buying a net NT$356.8 billion (approximately $11.2 billion) in a single month, setting a new all-time monthly record. Taiwan’s July exports reached $75.3 billion (approximately NT$2.4 trillion), up 32% year-over-year, with AI servers, semiconductors, and information and communications technology products serving as the primary growth drivers. Export orders also hit record highs, with information and communications and electronics product orders growing 89.5% and 71.7% year-over-year, respectively.
Cheng Chu-wen, Deputy General Manager of PineBridge Investments’ Investment Strategy Department, stated that the upward earnings revision trend for Taiwanese stocks has continued since the second half of 2025, with the market expecting earnings growth of over 40% in 2026 and valuations remaining reasonable. He further noted that despite recurring market skepticism about AI bubble risks, the four major cloud service providers continue to increase capital expenditure. According to Morgan Stanley statistics, the combined capital expenditure of the four major players will approach $740 billion (approximately NT$23.5 trillion) in 2026, and will surpass $1 trillion (approximately NT$31.8 trillion) in 2027, with no signs of reduction currently visible.
Kao Hao-chih, fund manager of the PineBridge Giant Fund, observed that margin trading balances in Taiwanese stocks have recovered to approximately NT$580 billion (approximately $18.3 billion), down from the mid-July peak of NT$631.3 billion (approximately $19.9 billion), indicating relatively improved market positioning. However, he cautioned that investors should continue monitoring whether the pace of margin balance growth remains reasonable relative to index performance. He believes the current investment environment is characterized by the coexistence of high valuations and high growth, making stock selection significantly more important than simply betting on overall market direction. Looking ahead to the fourth quarter, Cheng Chu-wen expects Taiwanese stocks to remain volatile at elevated levels, with market focus shifting from “whether there is an AI theme” to “whether earnings can keep pace with valuations.” The investment focus will center on companies with technical barriers, order visibility, and pricing power that can drive earnings upgrades through specification enhancements.
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