Heavy industry groups push into beauty — an unlikely but calculated pivot

Textile and chemical conglomerates — long associated with heavy, capital-intensive industries — are accelerating their push into cosmetics. Squeezed by oversupply from China and intensifying price competition in commodity materials, these groups are scaling back low-margin businesses while pouring investment and hiring resources into the beauty market, where synergies with their existing operations are clear and growth prospects are strong.

Hyosung Ventures, the investment arm of Hyosung Group, recently acquired a stake in istyle, the operator of @cosme, Japan's largest beauty platform. The move is the latest in a series of beauty investments Hyosung has made this year. In February, it took a 6 percent stake in Piontech, which develops functional cosmetics ingredients and products using nano-biotech. In May, it acquired part of ACC Holdings, a beauty solutions developer. In August, it invested 30 billion won ($21.7 million) in 2020, a North America-focused K-beauty commerce company, through a convertible bond subscription.

The group also sees development synergies with its chemicals and materials affiliate Hyosung TNC. The unit is investing in bio-based butanediol (BDO) derived from corn — a raw material used not only in spandex but also as a moisturizing agent and preservative alternative in cosmetics. Hyosung TNC took a further step at its annual general meeting in March, adding "manufacturing, sales, distribution, retail and e-commerce of cosmetics" to its corporate charter, signaling a full-scale expansion into the sector.

"We established a cosmetics division to respond to changes in the business environment, and aim to expand profitability by broadening our scope from cosmetics exports to manufacturing, sales and distribution," the company said in its business report. Hiring is already under way: Hyosung TNC is accepting applications for experienced cosmetics professionals through Sept. 25. On the marketing side, it is recruiting a global influencer marketer and a global content marketer; on the business development side, it is looking for talent to build a market-entry strategy for Europe and drive new business there.

Taekwang Industrial launched a wholly owned cosmetics subsidiary, SIL, in January and introduced its brand Sapin. Taekwang is building out its K-beauty business around SIL and Aekyung Industrial, which it acquired last year. The strategy pairs Aekyung Industrial's manufacturing and distribution infrastructure with SIL as a vehicle for developing new brands. Taekwang injected an additional 3 billion won into SIL in June, bringing its total capital contribution to 6 billion won.

Taekwang had already laid the groundwork at an extraordinary general meeting in October last year, adding "manufacturing and trading of cosmetics and related service products" to its corporate charter as part of a broader diversification drive. On the link to its existing businesses, the company said it can "directly supply the petrochemical products we manufacture as base ingredients for cosmetics, securing stable raw-material procurement and improving cost competitiveness," and that it will "apply textile technology to packaging manufacturing to build a differentiated product lineup."

The company also plans to apply techniques accumulated in textile manufacturing to ingredient extraction and absorption-enhancement technology for cosmetics, strengthening its research and development capabilities and securing a competitive edge in ingredient technology. Through strategic acquisitions, it intends to add new revenue streams to its existing business base — spanning manufacturing, sales and ODM opportunities.

The rush into cosmetics reflects both the synergies available and the rapid growth of Korean beauty exports. According to the Ministry of Food and Drug Safety, South Korea's cosmetics exports reached $10.2 billion in 2024, crossing the $10 billion mark for the first time. In the first half of last year, exports grew about 15 percent year-on-year, vaulting South Korea past the United States to become the world's second-largest cosmetics exporter, behind only France. Korean beauty products are becoming steady sellers in the United States and are gaining momentum in Europe, the Middle East and Latin America. The global cosmetics market is also on a consistent upward trajectory, with a projected compound annual growth rate of about 6 percent for the five years from 2022 to 2027.