China’s apparent ban of South Korean celebrity endorsements and cultural exports poses a risk to Korean companies’ business in the country but both AmorePacific and L Catterton Asia seem to be taking the news in stride.
AmorePacific, Korea’s largest cosmetics conglomerate, relies heavily on Korean celebrities to promote its brands in Korea and China. An AmorePacific spokeswoman said that she is not aware of any change in marketing strategies for China and the company released a statement saying that it “remains committed to Chinese customers”.
Etude House, part of AmorePacific’s portfolio, has partnered with many celebrities over the years. The brand currently features posters and advertisements with K-pop singer Krystal from girl group f(x). Another AmorePacific brand LaNeige almost exclusively promotes itself through photos and advertisements with top drama actress Song Hye-kyo.
L Catterton, the LVMH Moët Hennessy Louis Vuitton-backed fund formerly known as L Capital, holds stakes in South Korea’s YG Entertainment and Clio Cosmetics. Ravi Thakran, chairman and managing partner of the fund, said he sees the supposed ban, which China has yet to officially acknowledge exists, as a short-term issue.
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“In the mid term, we are positive on their future growth within Korean as well as overseas as consumers continue to show a healthy appetite for Korean entertainment and cosmetics,” he said. “We hope the two countries can resolve this issue soon and further build a mutually beneficial relationship to bring prosperity to the region.”
YG Entertainment, a talent management company with a portfolio of stars including rapper Psy, has seen its share price tank this week. On Thursday, its shares were down 3 percent in early afternoon trade. AmorePacific’s shares were down about 2 percent.
Over the past decade, thanks to the popularity of the “K-wave,” kpop stars, actors and models have arguably become even more popular than local celebrities in China. Observers are divided over how much the ban could affect the sales of Korean products in the country.
“When the [culture ban] policies come fully in effect, a drop in imported Korean products is inevitable,” said Angelito Tan, chief executive of RTG Consulting Group in China.
“Many Korean products get the bulk of their exposure to Chinese consumers via K-wave products, TV shows, movies, music videos… For example, BB cream became popular among many Chinese only after [the Korean drama] ‘My Love From the Star’ became a hit in China,” he said.