Korea’s leading K-beauty retailer CJ Olive Young continues to boost K-beauty globally with their mutual growth plan, funding opportunities, reduced interest rates and ecosystem support
CJ Olive Young, Korea’s most popular beauty and lifestyle retailer, has established a mutual growth management plan that will strengthen support for small beauty brands in Korea to grow into global brands while enhancing its compliance management system.
An annual investment of 100 billion KRW (74.6 million USD) will be dedicated to strengthening the foundation of the K-beauty industry
From January, Olive Young will be investing approximately 300 billion KRW (227.8 million USD) over the next three years, to create their mutual growth and compliance management plan to build a healthy and sustainable K-beauty industry.
The retail giant, in collaboration with the Industrial Bank of Korea, has established a mutual fund of 100 billion KRW (74.6 million USD) to help alleviate the financial burden often experienced by small and medium-sized enterprises (SMEs). Through this fund, SMEs partnered with Olive Young will be able to receive reduced interest rates on their initial costs.
The reduced interest rate applied through the company’s mutual fund is 2.39%p per year, lowering the loan interest rate by up to half. Partnering companies could save up to 24 million KRW (18 thousand USD) in annual interest if they borrow the maximum limit of 1 billion KRW (850 thousand USD). Among the partner companies, the first 50 that enrolled in the program will receive benefits starting from January, and 100 companies in total are targeted to receive benefits by the end of the year.
Additionally, Olive Young has shortened the payment period from 60 days to 30 days. Previously, this was a benefit only provided to direct suppliers, however, with this new program, all partner companies can benefit from the shortened payment period.
The company plans to enhance its overall compliance management system as part of its efforts to strengthen their Environmental, Social and Governance (ESG) framework. To achieve this, Olive Young is establishing an internal advisory body, the Legal Compliance Committee, as well as actively engaging with external members and pursuing ISO certification for compliance management.
Furthermore, Olive Young is expanding its investment within the K-beauty industry ecosystem by allocating 50 billion KRW (37.3 million USD) over three years, with the intention of nurturing the growth of new brands and products. The company will foster its growth both in Korea and overseas by providing meticulous assistance throughout the entire process of planning, research and development (R&D), sales and marketing. “With 25 years of experience operating as Korea’s first-ever beauty retailer centered around small cosmetics brands, our ambition is to support Korean SMBs on the global stage,” an Olive Young representative said.
In the initial stages, entrepreneurs will receive assistance entering the market through the K-Beauty Start-up Contest, financial aid and an opportunity to utilize Olive Young as a distribution channel. In the subsequent growth stages, the company plans to invest in R&D to further accelerate the growth of the SMBs, and facilitate participation in international beauty expos and operate export parcel services to help their ongoing expansion in the global market.
The exportation value of Korean cosmetics remained within the range of 2 to 3 trillion KRW (1.5 to 2.3 billion USD) throughout the early to mid-2010s, while last year the value surged to approximately 11 trillion KRW (8.47 billion USD). The establishment of an ecosystem allowing various small brands to thrive has led to the accelerated growth of K-beauty brands. Olive Young was one of the global gateways for K-beauty brands, leading various market trends with an extensive database of 13 million membership users. There have been numerous cases where Korean brands popularized by Olive Young have gone viral overseas due to K-pop content or social media.
Notable examples include iFamily SC – which achieved significant growth in a short period and even became a listed company after launching the color cosmetics brand Rom&nd at Olive Young in 2018 – and Ma:nyo Factory, which entered the stock market last year with its diversified product portfolio including its cleansing oil, Olive Young’s hit product. In addition to these, cosmetic brands such as CLIO, well-known for its cushion foundations, and VT Cosmetics, famous for its skincare line, have also been introduced to global consumers as “must-have shopping items from Olive Young,” leading to an increase in their global sales share of up to 60%.
Expansion of programs for local communities and disadvantaged groups to spread healthy beauty and wellness
Beyond nurturing the K-beauty industry ecosystem, Olive Young plans to support social causes through an investment of approximately 50 billion KRW (37.3 million USD) over three years. Initiatives include the “Pink Box” campaign, which delivers basic hygiene products to young women in need on a nationwide scale, and regional collaborative programs linked to Olive Young’s private brand product marketing. The company also aims to contribute to the promotion of a “conscious consumption” culture by expanding the use of paper packaging and cushioning materials, as well as advancing eco-friendly campaigns.
Olive Young plays a vital role in the global explosion of K-beauty – from discovering and nurturing new brands to supporting their global expansion
“At Olive Young, a domestic beauty platform, we will become a catalyst for the global expansion of K-beauty,” stated Lee Sun-jung, CEO of Olive Young. “We hope to spread our successful business model and support the establishment of cosmetics as a leading export item of South Korea.”