[MK NEWS] Starting with 4 Million KRW and Achieving Annual Sales of 700 Billion KRW… The Success Formula of This Company [NamDonNamSan]

Kim Sung Woon, CEO of Silicon2

"Silicon2"

Among Korean cosmetics industry professionals and M&A experts, Silicon2 is currently one of the most well-known companies. It is a sought-after partner for cosmetics companies wishing to export, and until last year, private equity (PE) and other investors were eager to engage with this promising company.

In fact, in March of this year, Silicon2 received a 144 billion KRW investment from Glenwood Credit, a credit investment firm operated by the private equity firm Glenwood.

The reason investors have been so interested lies in its business performance. Last year, Silicon2 recorded sales of 691.5 billion KRW, more than double the previous year's 342.8 billion KRW, and its operating profit soared to 137.5 billion KRW, nearly triple the previous year's 47.8 billion KRW.

While many small businesses are going bankrupt amid the economic downturn, Silicon2 continues to thrive.

Behind the Global Success of Korean Cosmetics is Silicon2

Silicon2 operates a B2B business model targeting cosmetics sales companies. It is extremely rare for small and medium-sized enterprises to export their products overseas entirely on their own for the first time. Most initial exports happen with the help of overseas distributors or trading companies.

Simply put, Silicon2 is a distribution company that supports the export of Korean cosmetics. It signs contracts with domestic cosmetics companies, purchases their products in bulk, and sells them to multiple countries abroad. Thousands of domestic cosmetics brands export their products to various countries through Silicon2.

Since Silicon2 operates a B2B business, it does not fully disclose client companies or brands unless requested.

Brands such as COSRX, Some By Mi, VT Cosmetics, Chosun Beauty, and Anua—companies that have become the representative success stories of K-Beauty overseas—owe part of their success to Silicon2.

Before these brands became well known to the public, Silicon2 recognized their growth potential, purchased their products in bulk, and exported them to multiple countries.

Silicon2 also sells cosmetics of its client companies and brands through its own online mall, StyleKorean.com.

This allows the company to accurately predict sales and establish successful overseas sales strategies through various experiments.

How Did Silicon2 Grow?

Silicon2 started in 2002 as a semiconductor overseas distribution company. The founder, CEO Kim Sung-woon, previously sold components overseas for a set-top box manufacturer, Kiryu Electronics.

He naturally learned the trading business and later moved to a semiconductor company to handle overseas semiconductor distribution. Working nearly around the clock, he achieved outstanding business results.

In 2002, he founded Silicon2 and transitioned into entrepreneurship. Although passionate, financial struggles marked the early days.

“I started Silicon2 with just 4 million KRW. I couldn’t afford office rent, so I used a corner of a friend’s office. When I worked in a company, I wasn’t making grand plans like ‘I must start my own business someday.’ I simply enjoyed overseas semiconductor sales and wanted to try various things, but there were limits to what I could do as an employee. So I left and started my own business.”

Silicon2 built its reputation by selling domestic semiconductor products such as Samsung Electronics’ DRAM overseas. CEO Kim worked tirelessly day and night, leading the company’s steady growth.

However, as electronics companies began disappearing in Korea, Silicon2 had to reconsider its business direction.

With a strong overseas distribution network, the company foresaw Korean cosmetics conquering the global market and shifted its core business to cosmetics distribution in 2012, initially focusing on China.

Today, Silicon2 has overseas branches in California, New Jersey, Poland, the Netherlands, France, the UK, Malaysia, Dubai, Vietnam, Singapore, Russia, and Indonesia. It also operates logistics centers in California, New Jersey, Poland, Indonesia, Malaysia, Dubai, and Vietnam.

“Each country has different preferences for cosmetics. Southeast Asia, with its hot climate, favors cosmetics with less oiliness, especially whitening products.

In contrast, Russia’s cold climate leads to preferences for oilier products like moisturizing creams. Recently, Korean sunscreen products have become particularly popular in the U.S.”

Silicon2’s rapid growth continues. To target South America, it plans to establish a branch in Mexico this year.

“There is demand for Korean cosmetics in South America and Africa, but Korean cosmetics companies have hardly entered these markets. Silicon2 will actively target these markets starting this year.”

What Is Silicon2’s Ultimate Goal?

“I’m often asked, ‘What kind of company does Silicon2 dream of becoming?’ We haven’t set grand or lofty goals and climbed step-by-step.

We simply did our best every moment. By doing our best, the next goal became clear, and by achieving that goal, we arrived at where we are today.

Many Korean cosmetics brands want to enter overseas markets but don’t know how and end up spending large sums on marketing without much effect.

Our dream is to build a global distribution network that allows excellent Korean cosmetics to be sold anywhere in the world.”