NEXTEYE "Break the wall of Chinese-made Korean cosmetics market"

Sunny Chen, CEO of NEXTEYE interview.
-After acquiring WEIMEIDU Group of China, the Korean cosmetics business will be challenged.

-Targeting global markets such as China, the United States, Southeast Asia, etc.

"Chinese cosmetics have limitations in developing into global products. We will globalize excellent Korean cosmetics into a global product".

【Sunny Chen, CEO of NEXTEYE】

On March 23rd, 2022, Sunny Chen, CEO of NEXTEYE, at NEXTEXE headquarters in Dongan-gu, Anyang-si, Gyeonggi-do, South Korea. She says that this year's cosmetics business will be the first year to enter the global market, including the United States.

NEXTEYE (137940) is not a company that focused on the cosmetics business. The company was founded in 1998, it was a company that sold equipment that inspects the appearance of smartphones and displays based on Machine Vision technology. In 2016, it was acquired by Chinese cosmetics company Aesthetic Group and entered the cosmetics business.

NEXTEYE challenged the cosmetics business because it highly appreciated the potential of Korean cosmetics at a time when the growth of the machine vision equipment business was limited. CEO Sunny Chen said, "Considering that it will be difficult to significantly grow the existing inspection equipment business, we started the cosmetics business because we thought that incorporating Aesthetic Group's business know-how into the Korean market could create synergy."

CEO Sunny Chen expressed, "Compared to the excellent productivity of Korean cosmetics, it has lacked dominance in the Chinese market." This is from the perspective that there were few products that appealed to attractive advantages from the perspective of Chinese people. At that point, he saw that adding excellent Korean cosmetics to marketing and distribution strategies favored by Chinese customers could create new demand.

She established a Chinese beauty franchise “WEIMEIAI” in 2017. And started the cosmetics business. It has established a business model for Chinese customers to experience and purchase cosmetics at skincare shops. As of 2020, the number of WEIMEIAI stores has rapidly expanded to 1,000. In addition, it has increased its market dominance by launching various of its own Korean cosmetics brands such as 韓詩緹, Myconos, and Beifuman.
Her strategy hit the mark. Since 2020, the cosmetics business has jumped to around 40 percent of total sales. It recorded 48.2% in 2020 and 42.2% in 2021. Compared to the 36.2% share in 2019, it has risen by up to 10 percentage points.

However, Consolidated sales fell 17.2% year-on-year to 28.8 billion won due to the contraction of the machine vision and cosmetics business due to the spread of COVID-19 last year. Operating losses also stood at 11.7 billion won, continuing the deficit following the previous year.

NEXTEYE is expanding its cosmetics business online to improve its poor performance. As cash generation is slow in high-priced product-oriented skincare channels, it has decided to actively target online channels with a large proportion of potential customers. At the end of last year, it signed an exclusive cosmetics supply contract with the "SOMIGO" platform, one of China's top eight online duty-free companies. It delivers and sells products from promising small and medium-sized Korean companies, including its own products such as sunscreen and mask packs. This year's target number of SKUs is 1,000 and the supply of products is more than 10 billion won. Bidding announcements are also currently being prepared to increase collaboration between companies. CEO Sunny Chen explained, "We delivered products from Korean SMEs that failed to enter the Chinese market on the SOMIGO platform and achieved good sales results. It may take up to two years to enter the Chinese market, but it is also an advantage that we do not need permission on the duty-free platform."

Also, we are seeking to expand its sales network to global markets such as the United States and Southeast Asia. Since the end of last year, mask pack products have been exported and distributed through social marketing. It plans to expand its market to Japan and Taiwan. The CEO Sunny Chen said, "We have exported one of the mask products to the U.S. and Singapore since the end of last year," stressing, "Not only the U.S. but also Japan and Taiwan will gradually grow their sales markets."

In addition, CEO Sunny Chen's strategy is to accelerate the entry of the machine vision equipment business into the Chinese market. She said, "We plan to expand the scope of cooperation with Chinese companies mainly in large domestic companies such as Samsung."