As you all know, a ribbon-cutting ceremony and press conference were held last month in Shanghai for our new Beauty Campus, with state-of-the-art production, distribution and R&D center. The building of the Beauty Campus Shanghai is a clear sign of our commitment to Chinese customers and the way we fulfill market demand by continuing to invest in new products suitable for their needs.   

The reason we have to move fast in China is that local companies are making great strides in the market. Five years ago, the share of local companies in the Chinese beauty market was just 40%. Today, it is now over 55%. It is obvious that competition will continue to intensify.  

The story of Thailand is two-fold. On the one hand, when we pushed into the Thai market in 2012, we found that, while authorized agents were able to do business on behalf of us, they could not achieve the expected results. Yet, despite this, we have still grown over 6-7 times bigger since we opened our office in Thailand in 2012 and the country has gone on to become one of the most important markets in the ASEAN region. I expect us to grow further in the Thai market. 

Dear Asian Beauty Creators, 

While there are almost 200 countries in the world, just 30 have over 90% of the share of the global cosmetics market; we have entered into 10, including Korea and China. We are also working to develop our presence and spread Asian Beauty in a further 12 countries, including France and the U.S. 

We must target 8 more countries to do business in 20 countries by the year 2020. Though we did launch our business in India recently, we need to move more aggressively. Moreover, we need to be mindful of countries close to Asia, like Australia, as well as Colombia and Brazil in South America, Mexico – the gateway connecting the Americas - and Middle Eastern countries such as Saudi Arabia, the United Arab Emirates and Turkey. 

Not long ago, I caught up with an official working for the mobile messenger, Naver Line, and heard that Line is a sensation not only in Japan, but also in Europe. At first, Line targeted Italy because of the way the people there are known to have a similar national sentiment to Koreans, but it struggled initially because, in fact, Italian culture was nothing like Korean culture. Yet, it took the failure in Italy as instructive and subsequently entered Spain, where it found that Spaniards were more like Koreans in terms of the way they communicate. As a consequence, Line gained tremendous popularity and became number one social networking application in Spain. What this shows – and there are countless other examples – is that the global market does not always work as we expect. It requires considerable effort to go into the global market, but this is what makes it all the more interesting.  

We are set on making our business more global. We have set ourselves the ambitious goal to make inroads into 8 countries by the year 2020 and 10 more countries by 2030. You each play the key role in achieving this. Our stage is growing in number and size. With our constitution backed by many years of experience in 12 countries, we are well positioned to spread our unique beauty across 20 countries and, over time, to 30 countries, making people beautiful. 

Dear AMOREPACIFIC Group members,

The Korean economy and market is now entering a new phase of its development comparable to other developed countries. Korea is already a rapidly aging society and it is forecast to be the worst in the OECD by 2020 based on age and birth rate. Meanwhile, long-term economic growth is expected to reach 2% in 2020. The current growth rate of Europe is expected to average 0.5%, while Japan is 1.2%, much better than it has been previously, but still not as strong as many other countries. The United States has enjoyed moderately high growth through good immigration policies, at about 2.5%. The implication is that the expected growth rate of Korea should be adjusted as 2% considering the side effects of rapid growth. Korea marked two-digit growth once, but it is virtually impossible to make such progress these days. Two-digit growth is possible when GDP is about 2,000~3,000 dollars, but the GDP of Korea is now 26,000 US dollars and it is heading toward 30,000 US dollars, which indicates that Korea will soon see a long-term normalization around the 2% growth mark.  

When that time comes, labor and social policies as well as regulations will be different than they are today. With the slowdown in growth and the market staying idle, there will be cutthroat price-competition and more niche products will be introduced to meet the needs of picky customers in an endless circle of competition. The kind of fierce market competition that leads to a stalemate has been witnessed in Western Europe and Japan, and it will soon come to Korea.  

Then, what should we do get through such a crisis? We must become the overwhelming winner, taking and holding onto the No.1 position in the distribution channel. Even when the market stops growing and some products go out of date, there is always new demand springing up. This is where local-level sales capability comes in. When everything goes smoothly and the growth rate increases, it does not matter whether a company’s sales capability is good or poor. But, when growth slows, having the right sales capability becomes critical to determining those that survive and those that thrive. 

Not long ago, the Korean President Park Geun-hye said in an administrative policy speech that now is the last golden time to revive the Korean economy. The five years from now until 2020 are the last inflection point for us to strengthen our capabilities and speed up our expansion into the world. Knowing that this inflection point lies ahead of us, we must come up with new ideas and work harder to embrace the opportunities it creates. Our new Korean head office which will be completed in 2017 and only a 20-story building may seem modest when skyscrapers nowadays tower over 100 stories tall. However, rather than getting drawn into the vortex of competition to go higher, we put efforts to build a wider building to enhance communication. This will help us to make our own culture.  

Dear AMOREPACIFIC Group members,

I’d like to tell you a few things about creativity. The world-famous inventor Thomas Edison is well-known for having invented the light bulb. Most people think that the he created his inventions single-handedly, but he in fact had 14 partners. He and his partners were granted 400 patents over 6 years at Menlo Park, which was built by Thomas Edison himself. The light bulb was their combined work. The genius of Edison’s partners was to see that investors were sold on the idea of a lonely genius and it was for this reason that they purposefully advertised that all inventions were the work of Edison. Due to the illusions surrounding Edison and his reputation, Edison and his partners were able to attract customers and inventors.  

In the 21st century, the film industry is regarded as the sum of creative collaboration. About 1,000~3,000 actors and actresses are cast for leading and supporting roles when shooting a scene, but everyone else besides around 100 members of the project team go home after shooting. Then, the same number of cast comes in when shooting starts again. Likewise, the organization and the scale of operation repeat a cycle of growing, shrinking and then growing again. The key to success in the film industry is the number of such organizations that can be operated at the same time. Pixar is one company that can integrate a large number of teams successfully. It has produced about 20 movies over the last 20 years, all of which have been box office successors. This is unusual in the film industry. It is a tremendous achievement, like winning 20 LPGA titles on 20 LPGA Tours. The success of Pixar represents the pinnacle of creativity-driven success and, ultimately, creativity is itself developed through collaboration. This means that creativity can only take shape when the wisdom and passion of people are shared. People engage in heated discussions every morning at Pixar studios. Directors, artists and scientists huddle together, evaluate the project and ask each other questions. It is said that Pixar is known as an enjoyable playground-like workplace, but that this can change into more of a warzone during discussions. 

In baseball, the Moneyball theory was first put into practice by Billy Beane, general manager of the Oakland Athletics baseball team and it subsequently rose to global prominence after it was made into a film starring Brad Pitt. Basically, the Moneyball theory advocates finding undervalued players and training them into stars, rather than buying overvalued players. Billy Beane selected players based on data statistics, not their popularity. He scouted players who were right for the team, for example, players with a high OBP (on-base percentage), rather than top batters, and he also focused on players who were dedicated to the team, rather than to personal records. As a result, his team won a record 20 games in a row and even went to the post season for four consecutive seasons, from 2000 to 2003. This stunning performance by his team, which was then the poorest of all 30 teams, is regarded as one of the greatest stories in the history of the American major league. Moneyball was a shock at first, but it has since become standard practice in baseball circles. A team of overvalued players does not guarantee a good result. It is teamwork that guarantees a win in the game.  

Developing creativity is a bit like engaging in team sports in which players work together. Even a great genius like Thomas Edison was a businessman that founded a brand and managed a team well, rather than being simply a creator. Creative innovation springs from the course of ordinary people working together and sharing their thoughts to complete one good idea. 

Dear Asian Beauty Creators,

The 21st Century is the age of creativity. While the 19th Century is known as the age of the industrial revolution and the 20th Century as the age of capital, the 21st Century is heading in a completely different direction. The age of creativity enables the sharing economy. One example of this sharing economy is Uber, which is a platform that connects passengers to taxi drivers with a single button on a smartphone. Passengers can use the application to book a vehicle and use the ridesharing service. The fare is charged according to weather, time and date, and the service differs depending on the class of vehicle. I personally used Uber when I was on a business trip. I liked the simpler, more convenient service it provided than that of a normal taxi. Another advantage of Uber is that the fare is similar and sometimes lower than a taxi, even when you ride in a higher-class vehicle. Today, new creative ideas like Uber are changing the industry. 

The sharing economy can be found in real life. A service that allows the purchase of goods with the points given upon the donation of toys and clothing that are not being used is getting popular. I think that this sharing economy will see rapid progress in many different industries. 

Likewise, creativity can take shape through collaboration with others. And collaboration starts with true openness and integrity. Instead of preaching about openness and integrity, we must practice and make them into a substantive value within our group. When openness and integrity are completely and fully implemented, people who break our values will be ousted and those who work hard will be rewarded as they deserve. This is how to enable enterprise-wide creativity. 

Let’s look ahead 4-5 years from where we stand now and prepare ourselves. To take a medical analogy, one of the risks of cancer is that it is so difficult to detect, precisely because it begins invisibly. If it was visible, less people would die of it. Korea have entered a low-growth era with a rapidly aging society. Times are changing fast, which also presents opportunities to emerging developed countries, which are growing rapidly. In order to maintain our presence in the global market, we must think of what is required for our group as a whole. Let's keep in mind that the key lies in creativity and that the wellspring of creativity is openness and integrity. Let us work hard together to bring in a culture of openness and integrity. Through this, we will be able to pave an enjoyable path to go global beyond Korea. 

Now, industries no longer grow or sink – rather, it is up to the company to either grow or fall back. With numerous changes in sight, I'd like to ask all of you to strive toward making the age of creativity ours for a greater world. 

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