In 2017, South Korea allowed the U.S. military to install the Terminal High Altitude Area Defense system (Thaad) to counter North Korean nuclear threats. Beijing interpreted that as a move against its own security interests, and state-run news outlets urged boycotts of Korean products.
In the heat of these tensions, GP Club took advantage of its position as a relatively smaller and newer brand.
“We were obscure at the time, so we suffered less than other big brands," Son said. “The key to pulling ahead of the competition was extending sales channels while others were slowing down.”
The company introduced a new product, the Honey Luminous Royal Propolis Mask, and expanded into Korean duty-free shops. GP Club’s lower prices attracted so-called daigou shoppers -- people buying products for clients in mainland China, where access to foreign goods is limited and prices are higher.
GP Club defied the rout and sales continued to grow, increasing to 9.5 million mask sheets in December 2017, and a record 100 million sheets in August 2018. Revenue surged to 300 billion won in the first half of last year, up from 50 billion for all of 2017, according to Son.
That got Goldman’s attention.
“It was uncertain which brand would advance after the Thaad issue, and we had conspicuous growth,” Son said.
China has since relaxed its restrictions, including one against groups traveling to Korea.
Uncommon Fortunes
In South Korea, self-made fortunes are uncommon. Of the world’s 500 richest people, only two of seven Korean billionaires are self-made, according to the Bloomberg wealth index. Family-run business conglomerates, called chaebols, have diversified across industries, leaving little room for self-made competitors. The beauty industry has been the exception.
At Incheon International Airport, the first things that draw travelers’ attention after entering the country are big TV screens showing product commercials of these less-known cosmetic companies, rather than Samsung or other prominent names.