K-Beauty is currently the international calling card of the cosmetics world as manufacturers and retailers look to South Korea as a source of growth. But while the internationalization of South Korean beauty brands is rapid, the same can’t be said for international brands in South Korea.

It is estimated that only 15 percent of South Korea’s beauty market is taken up by international brands. Korea’s two market leaders alone, AmorePacific and LG Household & Healthcare, account for between 55 percent and 70 percent of sales, according to estimates, and continue to see impressive growth rates. “The market for Korean brands in Korea is strong and will remain so for a long time,” comments Martin Roll, author of Asian Brand Strategy and CEO ofSingapore-based strategic advisory firm, Martin Roll Company. “If you look at almost any category—cars, retail, technology, mobile phones, home appliances, even food—[Koreans] prefer their own brands,” he continues. “There is this sense of isolation in Korean culture. If you speak to most of the international brands, they’ve always found Korea very hard to crack.”

Leading Korean brands such as Sulwhasoo, Innisfree (AmorePacific) and Belif (LG) are good at focusing on a story built around traditional remedies (a category that performs well, along with brands centered on product safety and surgical concepts). International brands such as Biotherm and Kiehl’s (both owned by L’Oréal) have been more successful in South Korea than other foreign labels, partly because of their storytelling, according to Florence Bernardin, General Manager of France-based consultancy Inspiration & Information. In make-up, Estée Lauder Companies-owned brands M.A.C and Bobbi Brown do well, and are the only two international brands to make the top 10 color cosmetics ranking, according to Euromonitor International. (Although skin care dominates the market, representing around 50 percent of beauty sales, make-up is the second-largest segment, and is growing fast in department stores, according to observers.)

With so much of the market taken up by just two players (Able C&C, the owner of Missha, is number three), there should logically be little room for smaller players. But this is not so. AmorePacific’s growth from a small, local company 20 years ago to an international beauty player today is a source of national pride to Koreans, Martin says, and is inspiring a new generation of entrepreneurs. “That’s going to fuel other industries, and will attract talent to the industry. Whether you’re a laboratory, or a designer, or an economist, it’s a major win for Korea.”

To read BW Confidential’s full report on South Korean brands, click here.