Back in 1945, Suh Kyung-Bae’s father started what would become South Korea’s biggest cosmetics company. Today Kyung-Bae is building on the legacy, entering new overseas markets and pushing to make Amorepacific the world’s seventh largest beauty brand by 2020.
Few would have thought that a boy who described himself as a daydreamer and once wanted to be a music producer would turn out to be one of the richest men in South Korea, with a net worth of $1.65 billion, according to Forbes as of April 2012. Named CEO of the Year in some Korean surveys, he looks after an empire that employs more than 8,000 people in 12 countries.
“I had to admit that when I was a student I didn’t put much thought into taking over the family business. During my school years, most of my time was dedicated to music and drinking with friends,” the soft-spoken and humble CEO told Asia Focus during a recent visit to Bangkok. “Once I finished school, I joined the army like any other Korean boy. My life was actually very ordinary.”
Still, it was hard not to learn a thing or two about cosmetics when one grows up next door to company headquarters. Even so, Kyung-Bae was the only one of six siblings to take an interest in the business. The family tradition, he says, actually began with his grandmother’s camellia-based hair oils and creams. His father saw the potential and in 1945 decided to expand the business and make it more international.
After earning an MBA from Cornell University in the United States, Mr Suh joined the company in 1987 at his father’s request. Working as a manager at an Amorepacific cosmetics plant near Seoul, he gained valuable experience.
“Working at the factory taught me a lot of things. I got to work on the production line, eat in the cafeteria and drink with the factory workers,” he recalls. “I have learned that building trust is an integral component in every relationship, and of course business is no exception. As a leader, I have to listen more; understanding other people’s minds is the most important thing.”
In the 1980s and into the early 1990s, the company was engaged in a variety of minor businesses and struggling for its own survival. Part of the problem was the South Korean government’s decision to lift tariffs on cosmetics, and US and European brands flooded the domestic market. Mr Suh and his father decided to set the company’s sights overseas — the United States, France, China, Japan and Southeast Asian nations.
“I think the future belongs to Asia. We will focus on China as we expect to boost sales to 3.4 trillion won by 2020, and become a top-three cosmetics brand there,” he says. “We will also expand our presence in key markets including Singapore, Thailand, Indonesia, Malaysia and Vietnam. India is our next destination, as I think herbal and natural cosmetic products will be popular there.”
Major brands of Amorepacific in overseas markets include Laneige, Sulwhasoo, Mamonde and Etude House. Currently the company is riding on the appeal of all things Korean throughout Asia, thanks to the growing popularity of Korea’s pop culture. Its brand presenters include K-Pop superstars such as the singers from Girls’ Generation.
“It is undeniable that the popularity of Korean cultural exports has provided great benefits for us. The sales of cosmetic products tend to mirror the likes of K-Pop stars,” says Mr Suh. “Asian people are becoming more affluent as many are now willing to spend more on their appearances.”
According to the Korean Cosmetics Association, South Korea’s cosmetics market is approaching saturation, so it is essential for players to start focusing on overseas markets. Recent data show the value of South Korean cosmetics exports has doubled since 2007, and three-quarters of those sales were in China and Southeast Asia.
For a cosmetics company such as Amorepacific, its CEO says, marketing strategies and product introductions have to vary with each country. It is critical to know the skin tone and colour that consumers in a given country aspire to. The growing sophistication of customers poses both a challenge and an opportunity, and for this reason research and development continue to be the company’s strength.
The approach has helped make Amorepacific Korea’s largest cosmetics maker and one of the most successful businesses in Asia over the past decade. Harvard Business School even chose the company as a case study in the category of successful globalisation.
When asked how the company aims to ensure sustainable growth, Mr Suh is one of many leaders that assign top priority to a spirit of innovation. The adaptability to change and create something new is what sets him apart from his peers, he believes. He is still closely involved in the manufacturing process and coming up with innovations to improve technology and product quality.
“My motivation always stands on innovation and creativity. Unlike making an automobile, the outcome of a cosmetic product’s quality improvement can be seen in a lot shorter period. It is a process of trial and error; we just need to keep on developing further,” says Mr Suh.
“All of my time is now dedicated to driving the company forward in order to pursue the Asian beauty creator’s crown.”
Besides Amorepacific’s success, Mr Suh also draws satisfaction from reading books about history, art and culture, autobiographies, and staying active with light exercises. Sometimes he just likes to flee the busy city to empty his mind and construct new, imaginative ideas.
“I like to talk to photographers; these people always give me loads of new ideas as they usually see the world in a different aspect from us. Listening to how they think and how they view society helps lift my creativity.”
Married with two daughters, Mr Suh always find time to spend with his family, especially on special occasions. He says he has a very strong and healthy relationship with his children, but whether they decide to carry on in the business is totally up to them.
Mr Suh describes himself as a businessman with soul of artist, and he dreams of one day becoming a full-time farmer at his own green tea plantation on Jeju Island.
“Even though we are one of the largest tea producers in South Korea, O’Sulloc Green Tea is only a very small part of our business line,” he says. “If I was a pure businessman, I would have taken it out of production long ago.
“However, I decided to keep it as it is something that my father and I cherished a lot. I have always wanted to become a farmer. Making the best green tea in the world is my lifetime goal.”