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Kolmar Korea Affiliate Yonwoo Pushes for Sale of Chinese Subsidiary

[비즈한국] It has been confirmed that Yonwoo115960, an affiliate of the Kolmar Group, is pushing to sell its local Chinese subsidiary. Some observers consider the sale of the Chinese entity unexpected, given the potential of the Chinese market. It is anticipated that Yonwoo will focus its efforts on the domestic and U.S. markets rather than the Chinese market moving forward.

Kolmar Korea161890 acquired Yonwoo, a company specializing in cosmetic packaging, in July 2022. At the time, the company explained the background of the acquisition as a move to strengthen the competitiveness of its cosmetics business value chain and secure clear growth momentum in the global market. Yoon Sang-hyun, Vice Chairman of Kolmar Holdings024720 and owner of the Kolmar Group, is known to have a deep attachment to Yonwoo. Currently, both Kolmar Group Chairman Yoon Dong-han and Vice Chairman Yoon Sang-hyun serve as non-registered executives at Yonwoo. Kolmar Korea itself stated at the time of the acquisition that "Vice Chairman Yoon Sang-hyun played a leading role."

According to Bizhankook’s reporting, Yonwoo is in the process of selling its local Chinese subsidiary, "Yonwoo China." According to business reports, Yonwoo China recorded 4.6 billion won in revenue and a net loss of 4.8 billion won in 2023. In 2024, it recorded 5.6 billion won in revenue and a net loss of 6.7 billion won. While profitability is poor, revenue is on an upward trend. Given the potential of the Chinese market, future growth in performance could have been expected.

A Kolmar Korea official said, "The sale of Yonwoo China is a strategic decision to maximize management efficiency and focus on core competencies," adding, "It is a measure to strengthen contact points with Chinese customers in a more efficient manner." The official further added, "Yonwoo plans to support Chinese customers directly through its Korean entity moving forward, and we plan to establish a sales entity in Shanghai within the year to continuously expand our sales capabilities within the Chinese market."

The recent atmosphere surrounding Yonwoo is not positive. Aside from the growth of Yonwoo China, Yonwoo's overall performance is declining. Yonwoo's revenue decreased by about 5% from 67.2 billion won in the first quarter of last year to 63.5 billion won in the first quarter of this year. In the first quarter of this year, it recorded an operating loss of 1 billion won. Kim Hye-mi, a researcher at Sangsangin Securities, analyzed, "While the U.S. business was solid, sluggish sales from major domestic customers acted negatively on Yonwoo's overall performance."

Yonwoo is showing strength in the Korean and U.S. markets rather than the Chinese market. Out of last year's revenue of 274.8 billion won, 149.5 billion won, or 54.39%, was generated domestically. Revenue from the Americas stood at 75.3 billion won, accounting for 27.39%. Conversely, revenue from Asian regions excluding Korea was 20.1 billion won, representing 7.31% of total revenue.

It is expected that Yonwoo will expand its operations with a focus on Korea and the U.S. after selling Yonwoo China. Kolmar Korea, the parent company of Yonwoo, is also recently putting effort into capturing the U.S. market. Kolmar Korea currently operates its "U.S. Plant 1" in Pennsylvania, and in 2023, it broke ground on "U.S. Plant 2" near the first plant. U.S. Plant 2 is scheduled to begin operations in July. As Kolmar Korea's market share in the U.S. expands, Yonwoo can also expect synergistic effects in the U.S. market.

Park Eun-jung, a researcher at Hana Securities, analyzed, "Kolmar Korea recorded 21.7 billion won in revenue and 1.5 billion won in operating profit in the U.S. in the first quarter of this year, breaking records for quarterly maximum revenue, profit, and highest profitability," adding, "Top-line growth is continuing due to the expansion of core customers' stock keeping units (SKUs), and operational efficiency is also improving."