Cosmax Inc., a South Korea’s leading original design manufacturer (ODM) of cosmetics, has already attracted 40 customers just one year after it launched business in the U.S. Its customers include multiple brands in connection with L’Oreal and other big name cosmetics companies.

Cosmax, founded in 1992 in Korea, creates, develops and manufactures skin care, make-up and hair care products manufactured for and sold under international brand names.

Demands for ODM products are rising steadily as major cosmetics makers outsource their production to cut costs, and more startups join the cosmetics market. According to Korea Health Industry Development Institute (KHIDI), the American cosmetics market was estimated to reach $38.7 billion in 2014, about five times the size of the Korean market.

Against this backdrop, Cosmax acquired a manufacturing site in Solon, Ohio from L’Oreal in 2013. The company invested an extra 30 billion won ($26 million) to upgrade the plant to meet Korean standards. In New Jersey, the company set up a research center and employed 30 new researchers. It has 200 R&D staff members in Korea. Thanks to this system, the company is able to develop a new product in six to 12 months, while rival companies in the U.S. need 18 to 24 months.

“Homegrown American ODMs are usually small, labor intensive companies dedicated to one or two products. They are behind us in portfolio-wide R&D and quality assurance,” said Yoo Seok-min, head of Cosmax USA Corp. “We propose 20 to 30 new products to customers while rival companies visit them with one or two new products.”

The company asset in the U.S. props up its R&D capability in the local market. Cooperation with local customers in developing new products for various ethnic groups led to more segmented products. As a result, sales from color cosmetics are rising against skincare products in the U.S. market.

“Once our cosmetics are well received by U.S. consumers, we can sell them in Latin America and Europe as well. And we have a plan to enter other markets next year,” Yoo said.

Cosmax is expected to generate 10 billion won from the U.S. market for the first six months of this year, up from 2 billion won a year ago. Its sales target is 40 billion won.

By Chung Soon-woo

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