The decision by Korea Customs Service (KCS) to limit the number of beauty products bought by individuals at Duty Free from 50 to 30 is affecting shares of cosmetic companies such as AmorePacific and LG Household & Care.
The recent move by the KCS has seen many investors get rid of cosmetic stocks, with shares of AmorePacific falling 2.06 percent to 380,000 won per share on Monday from Friday while LG Household & Care took an even bigger hit of 6.05 percent.
Indeed, the KCS decision comes at a time of tighter regulations in Asia as China also tightened sanitary rules on Korean cosmetic products, alongside other imported products.
With AmorePacific relying on duty free for 40 percent of its sales, the new tightening of rules will no doubt create some anxiety, likewise with other Korean brands that rely on duty free sales such as Tonymoly.
However, some companies were more optimistic, with a spokesperson for LG Household & Healthcare, telling the Korean Times, “We are already limiting the number of goods per individual to 20. So, even if the guideline goes into effect, it has nothing to do with us,” an LG Household & Health Care spokeswoman said.
“What the Chinese government wants to do is to reduce the amount of harmful substances contained in cosmetics. Our products already contain less harmful materials than required under the strengthened standard.”