Kolon Global Corp., the construction and retail unit of South Korea’s conglomerate Kolon Group, plans to ride on the K-beauty wave to tap into the burgeoning consumer market in Iran, which is in the process of liberalization after lifting of international sanctions. According to sources from the government and industry, the company will sign a memorandum of understanding (MOU) next month with a local retailer to establish a $10 million cosmetics joint venture in the country.

An unnamed industry source said that the company plans to open a cosmetics retail shop first and later establish a manufacturing base in Iran upon promising market prospects. Despite interruption in trade and business activities during the sanctions, Korean brands are received well in Iran due to immense popularity of Korean epic TV dramas revolving around tradition and family value that hit home with the conventional Muslim society. Korean beauty products have become a blockbuster across Asia and the same marketing based on Hallyu, or Korean wave, could succeed in the Middle East, said a company official.

Kolon Global in its shareholders’ meeting in February announced that it will launch cosmetics business this year. Kolon will be in charge of supplying the merchandise, and its Iranian partner would be jointly running retail business. The trading company ultimately aims to launch customized cosmetics lines for Iranians.

Iran with a relatively big population of 80 million imports cosmetics worth $1 billion a year. The demand could grow explosively through liberalization process and on increased household income.

“The 1.4 million women aged between 15 and 45 living in large cities are estimated to spend an average of $150 on cosmetics a year," said Hong Jeong-hwa, a chief researcher of strategic markets at Korea International Trade Association (KITA).

Kolon Global has been doing business in Iran for more than 30 years since it made first foray into the market by establishing its branch in Teheran in 1982.The company did not pull out to maintain business relationship there when the country went under sanctions for nuclear activities. Korea that joined periodical international sanctions slapped unilateral sanctions and trade ban against Iran in 2012. Korean businesses have been expanding and renewing business in the country after the United Nations formerly lifted sanctions in January.

By Yoon Jin-ho

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