An app that helps you find the safest makeup
Since launching in 2013, Hwahae has accumulated more than 3.5 million users, making it an app that cosmetic manufacturers, including big names such as AmorePacific and LG Household and Health Care cannot ignore.
“Only 10 percent of the products sold in the market are free of potentially harmful ingredients,” said Hwahae’s CEO, Lee Woong. “Fragrance and pigments are used frequently to make products stand out, but this should stop. Laws on ingredient labeling should be enforced as well.”
In 2008, the Ministry of Food and Drug Safety began requiring cosmetic products to list every ingredient. However, components under 50 milligrams (1.7 fluid ounces) don’t have to be included. A lot of imported products hide their ingredients in the original package by attaching Korean labels. Online brands gaining popularity on the K-beauty wave abroad are not yet obliged to list every ingredient, although they will be starting next year.
Hwahae has ingredient details on 70,000 products out of 87,000 products on the market. They are divided into 15 categories including skin care, cleansing, sun care, hair, nails and perfumes. More than 13,000 ingredients used in beauty products are listed on the app.
The app also allows users to review the products and rate them on a five-star scale. Hwahae has more than 1.5 million user product reviews.
“Manufacturers are highly sensitive about product reviews as well,” said Lee. Brands that receive top reviews on their products use them for promotion. Some even quote sentences from the app’s reviews as part of their marketing.
Renowned brands such as AmorePacific and LG Household and Health Care also pay attention to negative reviews.
“Major cosmetics companies once considered fragrance a necessary ingredient, but they’ve recently started to develop products without,” added Lee. “We’re trying to reduce ineffective ingredients in order to downgrade products’ level of irritancy to the skin,” said an AmorePacific spokesman.
It’s hard to find any company in Korea that has as much information on beauty products as Hwahae. “Even the Ministry of Food and Drug Safety questions Hwahae on cosmetics’ ingredients,” said a source in the industry.
“There are ingredients that are newly added or disappear from the same product. As manufacturers tend to be sensitive about the ingredient information posted on the app, we apply updates, new research results or modification requests from companies on wrong data,” said a Hwahae spokesman.
Vice President Cha Suk-yong of LG Household and Health Care, famous for successive M&As, is said to have eyed the cosmetics app.
“As his former acquisitions were mainly big brands and companies, I was told that Cha greatly hesitated over the uncertainty of Hwahae’s corporate value, which at the time had almost no revenue,” said a source from LG Household and Health Care. While Cha wavered, Hwahae was snatched up last year by Nice Group, a local credit-rating and financial information company. Other companies also had expressed interest in investing in or acquiring Whaehae.
Hwahae recently launched an e-commerce business. Its plan for next year is to open a brick-and?mortar store of the same name.
A comparable model can be found in nearby Japan where the cosmetics portal site @Cosme offers information on ingredients and allowed customers to leave reviews. The website is visited by more than 10 million Japanese and participates actively in offline retailing, which quickly made the company an influential player in the market.
There are concerns about Hwahae’s entry into e-commerce, however.
“Hwahae’s distinctive strength is that they supply objective information as a third party. If they start selling products and put advertisements on the app, this could influence their decisions to consider profitability,” said an industry insider.
“We live in an era where the brand value no longer guarantees product quality. Consumers nowadays know that a lot of companies with low brand recognition work hard on developing quality - this opened a new chance for honest mid-sized and small companies,” said Lee. Manufacturing costs for cosmetics are below 10 percent of the price. As a result, Lee said, more brands are making a name for themselves by releasing quality products.
“I’m a little afraid our activities may be seen to be purposed on attacking cosmetics brands, because that’s not our goal at all,” said Lee. Hwahae is expanding its research and recently signed a deal with Dongduk Women’s University.
Despite his success, Lee still remembers what a cosmetics brand manager said when he was starting the business: “This won’t work. You should stop wasting your time on this useless business and do something bigger.
“It was small then, but look what has become of it now. Giving accurate information on cosmetics to consumers has been and still is an important task. What has changed is that consumers themselves have started to attentively look at the packages’ ingredient lists.”
BY YOO BOO-HYEOK [email@example.com]