Core Viewpoint - Amorepacific is increasing its investment in the Chinese market, indicating a strategic shift to enhance local production and capitalize on the anticipated market recovery after a period of stagnation [1][2]. Group 1: Production and Market Strategy - Amorepacific plans to boost the operational rate of its Shanghai factory, which had been reported at only 15.3% for skincare and 15.9% for makeup production in Q1 2025, suggesting a near halt in operations [1]. - The company emphasizes that the Chinese market remains a core part of its global strategy, with local factories producing key brands like Innisfree and Laneige, and production levels fluctuating based on market dynamics [1][2]. - Despite previous challenges, the Chinese market showed signs of recovery in Q2 2025, achieving a year-on-year growth of 23.2% and profitability for two consecutive quarters [2]. Group 2: Brand Development and Market Positioning - Amorepacific is intensifying its investment in the AESTURA brand, launching online flagship stores on platforms like Tmall and Douyin starting July 2025 [4]. - AESTURA, which focuses on sensitive skin care, aims to penetrate the competitive market by pricing its products between 100 to 200 yuan, positioning itself as a cost-effective option [4][6]. - The sensitive skin care market in China is projected to grow from 300 billion yuan in 2023 to over 400 billion yuan by 2028, with a compound annual growth rate exceeding 6% [5]. Group 3: Competitive Landscape and Challenges - AESTURA's strategy to maintain a price point below 200 yuan reflects an attempt to gain market share in a mature segment, but it faces competition from established domestic brands like Winona and Yuze, which have stronger brand recognition and distribution [6][9]. - Amorepacific's high-end brand AP, which emphasizes "scientific skincare," has struggled to establish a significant presence in the Chinese market due to limited offline expansion and reliance on online channels [9][10]. - The company acknowledges the need to enhance brand recognition and consumer trust in the high-end segment, which increasingly relies on offline experiences and customer engagement [9][10].

Core Viewpoint - Amorepacific is increasing its investment in the Chinese market, indicating a strategic shift to capitalize on the anticipated recovery of the market after a period of stagnation [1][2]. Group 1: Production and Operations - Amorepacific plans to enhance the operational capacity of its Shanghai factory, which has been underutilized, with skincare and makeup production lines operating at only 15.3% and 15.9% respectively in Q1 2025 [1]. - The company refuted claims of its factory being in a state of suspension, asserting that operations have been normal and production levels fluctuate based on market dynamics and resource optimization [1]. Group 2: Market Performance - The Chinese market has shown signs of recovery, with a 23.2% year-on-year growth in Q2 2025, marking two consecutive quarters of profitability for Amorepacific [2]. - The growth is partially attributed to a low base effect from the previous year [2]. Group 3: Brand Strategy - Amorepacific is intensifying its focus on the AESTURA brand in China, launching online flagship stores on platforms like Tmall, Douyin, JD.com, and Vipshop starting July 2025 [4]. - AESTURA, which targets sensitive skin, has previously relied on a network of local hospitals in Korea and aims to expand its reach in the Chinese market through online channels and collaborations with key opinion leaders [4][6]. Group 4: Market Trends - The sensitive skin care market in China has been growing rapidly, reaching a market size of 30 billion yuan in 2023 and expected to exceed 40 billion yuan by 2028, with a compound annual growth rate of over 6% [5]. - AESTURA's pricing strategy, with products priced between 100 to 200 yuan, aims to penetrate the competitive market by offering better value [6]. Group 5: Competitive Landscape - AESTURA faces competition from established domestic brands like Winona and Yuze, which have strong professional endorsements and market penetration [6]. - Amorepacific's high-end brand AP is struggling to establish a foothold in the Chinese market due to limited offline presence and reliance on online channels [9][10]. Group 6: Future Directions - Amorepacific plans to enhance its product offerings tailored to Chinese consumer needs and strengthen brand recognition in the market [11].