South Korea's cosmetics export boom is masking a troubling trend: while K-beauty shipments hit a record $11.4 billion in 2024 and became the top consumer goods export in early 2025, the number of cosmetics manufacturers has declined for two consecutive years. The market is increasingly dominated by a handful of large ODM firms, leaving smaller and newer players struggling to survive. For overseas buyers, this signals a narrowing supplier base and potential risks in diversifying sourcing options.
## Export surge and market concentration
According to the Korea Health Industry Development Institute, total domestic cosmetics manufacturer sales reached 27.48 trillion won ($18.3 billion) in 2024, up 15.8% year-on-year—far outpacing the broader bio-health sector's 8.8% growth. However, this growth is heavily concentrated: the top four ODM firms—Korea Kolmar, Cosmax, Cosmecca Korea, and C&C International—generated combined sales of 6.05 trillion won, accounting for roughly one-quarter of the entire industry's revenue among 4,158 manufacturers.
## Factory closures rise despite new entrants
Data from the Ministry of Food and Drug Safety shows the number of cosmetics manufacturers fell from 4,567 in 2023 to 4,158 in 2024, marking two straight years of decline. Meanwhile, new ODM licenses have steadily increased from 325 to 367 over the past three years. The paradox: more factories are closing than new ones opening, even as export demand grows. The Korea Customs Service reported cosmetics exports of $11.4 billion in 2024, up 12.3%, and cumulative exports from January to May 2025 exceeded $5.6 billion, making cosmetics the top consumer goods export.
## Struggles of latecomers
New entrants face severe headwinds. Monami Cosmetic, a subsidiary of stationery firm Monami, recorded sales of just 3.9 billion won in 2024 with a net loss of 4.8 billion won—its third consecutive year of losses. Sunjin Beauty Science, which entered ODM in 2023, saw operating profit plunge 42% to about 6 billion won. Analysts note that while technology matters, brand reputation and client trust overwhelmingly favor established large ODM players.
## What buyers should watch
For overseas importers and distributors, the growing concentration among top-tier Korean ODM suppliers means fewer options for mid-sized or niche product development. Newer ODM firms may offer competitive pricing or specialized capabilities, but their financial instability and limited track record pose supply continuity risks. Buyers should evaluate supplier diversification strategies and consider long-term partnerships with financially sound ODM partners, while monitoring the shakeout among smaller manufacturers for potential acquisition or collaboration opportunities.
## Regulatory and channel signals
The Korean government's cosmetics regulatory framework remains stable, but the market dynamics suggest a two-tier system emerging: large ODM firms with global client bases and R&D scale versus smaller players vulnerable to closure. Overseas buyers should verify supplier certifications, production capacity, and financial health before committing to new partnerships. The trend also highlights the importance of SKU expansion and export-driven growth strategies among top ODM firms, which may influence pricing and lead times for international orders.