AmorePacific :
“France Expedition"
Group 4
Suah SIRH
Sibylle SCHERRER
Francis DUFAY
Thomas HUDE
1. About AmorePacific
1. AmorePacific Korea
2. Europe S.A
2. Faced Problems in Early Age
1.
2.
3.
4.
Why AP came to France
Problems
Putting a Multicultural Manager
Solutions and Success
3. France Attractivity
1. Benefits
2. Constraints
3. Advise from AmorePacific
4. Our Conclusion
About AP
Problems
Attractivity
Conclusion
AmorePacific Co.
Description
Vision
CEO
Employees
Place
• Korean provider of cosmetics (78%), personal care (16%),
and healthcare products (6%)
• World‘s top 10 cosmetics
companies by 2015
• Suh Kyungbae (Korean)
• 3000
• Seoul: Headquarter
• 9 overseas subsidiaries
Key Figures
• Revenue: 1 Billion €
• Profit: 122 Million €
Others 4
France 6
Unit:%
Korea
90
Brands
<Best in France>, Fall 2006
3/24
About AP
Problems
Attractivity
Conclusion
Europe S.A. - Overview
Description
CEO
Employees
• Europe S.A is in charge of Perfume business
• High degree of autonomy
• JOHN Insoo (Korean)
• 200 (Manufacturing: 120)
Revenue
• Total: 60 Million €
Unit:%
Place
Direct
Investment
Product
<Best in France>, Fall 2006
• Paris: Headquarter
• Chartres: Factory
• 62 Million €
• see next slide
Others
S. Korea 2.5
Middle East 6
Spain 5
France
50
US
7.5
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About AP
Problems
Attractivity
Conclusion
The Product _Perfume
• Perfumes:
– Lolita Lempicka
– L
– Castelbajac
• For men and women
Lolita Lempicka
• Target group:
– 20-25 years (LL)
– 25-35 years (L)
Castelbajac
<Best in France>, Fall 2006
5/24
About AP
Problems
Attractivity
Conclusion
Europe S.A - History
1st Wave
Established
- Bought Cosmetics
Factory in Chartre
- Started to develop
Skincare products
90
: Go Native
: Aim to Growth
Operate with Native
People for Global
Success
With new investment,
aim to grow Sales 5
times until 2015
Decided to license
Lolita Lempicka
92
95
Launched Lirikos
- Total cost was too high
- Regarded as a strange,
exotic product to French
People
<Best in France>, Fall 2006
2nd Wave
97
Launched
Lolita
Lempicka
06
09
Launched L
- Second Product
- Targeting Women
in age 25-35
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1. About AmorePacific
1. AmorePacific Korea
2. Europe S.A
2. Faced Problems in Early Age
1.
2.
3.
4.
Why AP came to France
Problems
Putting a Multicultural Manager
Solutions and Success
3. France Attractivity
1. Benefits
2. Constraints
3. Advise from AmorePacific
4. Our Conclusion
About AP
Problems
Attractivity
Conclusion
Why AP came to France
Reason
Implication
• The Founder of AP got a strong impression of
France and its Cosmetic industry when he
visited France in late 50’s
• Because of that experience it was his dream of
life to run a cosmetic business in France
• As it is seen in this case, France got a lot of
benefits from the “country Image” and
“Prosperity of the past”
1956, Seoul
Suh Sunghwan
<Best in France>, Fall 2006
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About AP
Problems
Attractivity
Conclusion
3 Key Problems they Faced
No understanding of Western Culture
•
The first product line of Europe S.A ‘Lirikos’ got a
reputation “Strange and Exotic”
AP could not sell any product
•
Operation
by Korean
managers
Hardly accessing to French Know-how
•
It takes time for ‘Learning’ to know different
country
Learning curve
•
Less innovation, and Creativity
•
•
<Best in France>, Fall 2006
Because of less development in Korean Cosmetic
Industry
Cultural issue
9/24
About AP
Problems
Attractivity
Conclusion
Introduced Multicultural CEO
• Very few skincare products were sold in the Western Countries
until 1994
• AmorePacific hired Insoo JOHN in 1994 to turnaround the “Europe
S.A
Career
Record
Insoo JOHN
<Best in France>, Fall 2006
– Undergraduate in SNU, South Korea
– Graduate, Ph.D in Paris XI University
(Economics)
– Studied in France 10 years before joining
the AmorePacific
– Bilingual in Korean and French
– Became CEO of Europe S.A in 1997
10/24
About AP
Problems
Attractivity
Conclusion
Executed “Go Native” Strategy
Cost
1 Operating with Native People
– Hired French cosmetics experts and
made them to be a manager of each
department
– There is no Korean in AP Europe now
2 Licensing the Native Brand
– Licensed French designer brand “Lolita
Lempicka” and “Castelbajac”
– Positioned as a French product when AP
introduce its Perfume in the market
<Best in France>, Fall 2006
Relatively
higher labor
cost than
Korean
worker
A part of the
product
price is paid
for a license
fee
11/24
About AP
Problems
Attractivity
Conclusion
1st Wave
Problems
Operation
by Koreans
• All managers are
Korean
• Lack of input from
French expertise
• Poor market response
<Best in France>, Fall 2006
Solution
Result
Localization
Great
Success
In Global
Market
• Hired French
cosmetics experts
• Licensed a French
fashion designer
brand
• 5th most popular
perfume in France
• Sold in about 90
countries today
12/24
About AP
Problems
Attractivity
Conclusion
2nd Wave – New Challenge
• With its past success, Europe S.A. wants to grow
• Until 2015, it visions now grow its sales 5 times more
Diversified
2015
Growth Strategy
1. Broaden Product line
2. Widen Customer Base
Product
Range
2006
Focused
Focused
<Best in France>, Fall 2006
Customer
Range
Mass
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1. About AmorePacific
1. AmorePacific Korea
2. Europe S.A
2. Faced Problems in Early Age
1.
2.
3.
4.
Why AP came to France
Problems
Putting a Multicultural Manager
Solutions and Success
3. France Attractivity
1. Benefits
2. Constraints
3. Advise from AmorePacific
4. Our Conclusion
About AP
Problems
“France” Benefits
• Plenty of
competitive
human resource
– Highly innovative,
and creative HR
Expertise
Attractivity
in cosmetics business
Infra
structure
• Good suppliers
• Well-developed
logistics
• Competitors
• Network
• Cluster
Financial
Stability
• Stable political,
economical
environment
• Reduces risks
of return
• Technology
• “France” is a
strong brand
<Best in France>, Fall 2006
Image of
the
Country
Conclusion
15/24
About AP
Problems
Attractivity
“France” Constraints
Cultural
Individualism
Conclusion
in cosmetics business
• French people more concerned about themselves than
the organization
• They have strong personalities
• Sacrifice and Devotion for the company is not the norm
 Hard to make collective, systematic organization
• Rooted from cultural, historical background
• Workers want to get their portion regardless of
company’s performance or future
High
concerns
about
Value
Distribution
 Hard to make “Pie” bigger
<Best in France>, Fall 2006
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About AP
Problems
Attractivity
“France” Constraints
Over
protection of
workers
Conclusion
in cosmetics business
• 3 steps of protection:
Labor law, Collective Bargaining and Company Union
• Strict regulations about lay-offs
• Legal labor hours: 35 hours/week
 Low labor flexibility + High labor cost
Labor
cost
Social
Security
Tax
40% more
Labor cost
Social
Security
Burden
 Raise COGS
<Best in France>, Fall 2006
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About AP
Problems
Attractivity
Conclusion
France Attractivity
• Overall, France is a great place to operate cosmetics business
• Amorepacific is satisfied with France’s operational environment
• However, in other industry France could be a bad place to Invest
because of its constraints
Cosmetics
Industry
Cost
Competitive
• Is not a labor concentrated industry
• Needs creative and innovative
resources
Pros
<Best in France>, Fall 2006
Cons
Labor
Concentrated
High
Costs
Pros
Labor
Protection
18/24
About AP
Problems
Attractivity
Advise for the better
Conclusion
from AP
• France has a lack of adaptability in system of Capitalization
• The most urgent problem to be solved is the conflict between French
labor and Capital
Phenomenon
Over Protection of Workers
Cultural Individualism
Solution
Focusing on the Value Distribution
rather than Value Creation
€€
<Best in France>, Fall 2006
Enterprise /
Political Efforts
€€
19/24
1. About AmorePacific
1. AmorePacific Korea
2. Europe S.A
2. Faced Problems in Early Age
1.
2.
3.
4.
Why AP came to France
Problems
Putting a Multicultural Manager
Solutions and Success
3. France Attractivity
1. Benefits
2. Constraints
3. Advise from AmorePacific
4. Our Conclusion
About AP
Problems
Our Conclusion
Attractivity
Conclusion
_ Case Analysis
 The story of AmorePacific in France is a
success, thanks to a general adaptation of its
organisation and structure to a specific
market (Go-Native)
 AmorePacific benefits from the local knowhow, and from the image of French perfumes,
in a sector where the cost of work and the
flexibility of the labor market are not crucial
<Best in France>, Fall 2006
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About AP
Problems
Our Conclusion
Attractivity
Conclusion
_ Recommendations for AFII
• To maintain its position of being the 4th largest FDI
country, France has to develop more “Centers of
Excellence”. This will attract new companies.
– e.g. making clusters, establishing educational institutions for
each industry
• The first difficulties of AmorePacific show that
foreign investors should be helped to face cultural
difficulties, especially through market and cultural
information
– e.g : coaching of new companies, database of problems faced
by new investors, etc.
<Best in France>, Fall 2006
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About AP
Problems
Attractivity
Conclusion
Thank you
Any Questions?
<Best in France>, Fall 2006
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About AP
Problems
Attractivity
Conclusion
We thank
• JOHN Insoo,
–
–
–
–
CEO
Mobile: +33.6.82.80.47.35
Email: insoojohn@hanmail.net
Address: 6, rue Caroline 75017 Paris
<Best in France>, Fall 2006
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About AP
Problems
Attractivity
Conclusion
References
• http://www.amorepacific.co.kr/
• http://www.amorepacific.co.kr/eng/ir/ir/ir.jsp
• Datamonitor (2005). Personal Products in South Korea.
Found on November 1 2006 at http://web.ebscohost.com
• Min, K.J. (2004, March 19). Asian company’s perfume
passes French smell test. The Wall Street Journal.
<Best in France>, Fall 2006
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About AP
Problems
Attractivity
Conclusion
Our Team
• SIRH Suah
– HEC CH J26, 1, Rue de la Liberation 78351 Jouy en Josas
– Apgujungdong Hyundai APT 106/1105, Gangnamgu Seoul, South Korea
– sirhsuah@gmail.com
• SCHERRER Sibylle
– HEC CH J29, 1, Rue de la Liberation 78351 Jouy en Josas
– Uf de Breiti 1, 8460 Marthalen, Switzerland
– sibyllescherrer@bluewin.ch
• DUFAY Francis
– HEC CH C86, 1, Rue de la Liberation 78351 Jouy en Josas
– chemin de la combe 69400 Liergues France
– francis.dufay@mailhec.net
• HUDE Thomas
– 177 rue du Faubourg Poissonnière 75009 Paris.
– Thomas.HUDE@mailhec.net
<Best in France>, Fall 2006
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