Are K-products Really Popular in HK?
Project Overview
With K-pop's big splash in Hong Kong, more and more Korean products are recently observed in both offline and online Hong Kong markets recently. However, whether Korean products were actually being actively purchased by Hong Kong consumers remained uncertain. This project analyzes the status of Korean products in the Hong Kong market by crawling HKTVmall, one of the most popular Hong Kong online shopping malls.
No. of Korean Products by Category
Chart 1
Table 1
Among a total 13 categories in HKTVmall, 'Beauty and Health' is the category with the largest number of Korean products.
The above bar chart shows the number of Korean products in each category. Korean products are dominant in 'Beauty and Health', 'Personal Care and Health', and 'Supermarkets'. About 12.95% of the total products in the Beauty and Health category come from Korea. Korean products are taking up around 10% also in the rest of the two categories. On the other hand, Korean products in four categories, 'Home and Family', 'Toys and Books', 'Gadgets and Electronics, and 'Sports and Travel', only take up about 1% of the market.
These numerical figures support that K-beauty and K-foods are trending in Hong Kong these days. Meanwhile, It was surprising to see that Korean products did not dominate the category despite Samsung and LG is one of the top electronics brands in the world.
Top Selling Products in Beauty & Health Category
Table 2
The Beauty and Health category has 78,467 products in total. In order to find out if Korean products are popular indeed in Hong Kong online market, the top 100 products that have the highest sales volume would are extracted. 'isKorea' column is added to focus on comparing Korean and Non-Korean products in later analysis.
Market Positioning
Although it has been confirmed that there are many Korean beauty products in the Hong Kong online market, questions remain as to whether Korean products are actually preferred by Hong Kong consumers. It motivates to look into the sales volume to examine the position of Korean products in the Hong Kong online market.
Number of Products: Korea vs Non-Korea
Chart 2
Sales Volume: Korea vs Non-Korea
Chart 3
Korean products have been well-positioned in the Hong Kong market.
The total number of Korean products sold at the HKTV mall is 12%, up to 28% if the data is narrowed down to the top 100 products sold. As the total number of Korean beauty products was 10,165 (Table 1), 0.28% of Korean products succeeded to be top-selling products. Non-Korean products, however, only 0.09% of products could become top-selling products. Similarly, 17.23% of the sales of HKTVmall's Beauty category is generated by Korean products, and it even rises to 23.76% when only considering the top 100 products.
In other words, Korean products possess higher competitiveness, in that it is included in the top-selling product group more than Non-Korean products. K-beauty products are not just on the market in large numbers, but are actually popular and selling well.
Competitiveness of K-Beauty in HK
Now, it is clear that the market size of K-beauty products in Hong Kong is significant. The next step is to find out how strong K-beauty's market position is compared to other countries. According to 'The 2021 Beauty Top 100' reported by WWD (Women's Wear Daily), the five countries that generated the highest sales revenue in 2021 were the United States, France, England, Japan, and Germany. Since Japan is the only Asian company among those five, it seems reasonable to select Japan as a key competitor to analyze the Hong Kong online beauty market. The following tables and charts summarize the market size of Japanese and Korean products in Hong Kong.
Chart 4
Table 3
Comparative Analysis: K-beauty vs J-beauty
After removing the outliers which have extremely high and low prices, it turns out that the market size of Japanese products is bigger than that of Korean products in HKTVmall. The Beauty and Health category consists of 11.38% of Korean products, 26.35% of Japanese products, and the rest from other countries (Chart 4 & Table 3). It is worth looking into the relationships between the number of products, total sales revenue, average price, and average sales volume.
No. of Products vs Average Sales Volume
Even though there are Japanese products more than twice Korean products on the market, the average sales volume is almost the same with a difference of a mere 10 units. It implies that Hong Kong consumers are willing to purchase Korean beauty products more often than Japanese products. Or, it also can be interpreted that Hong Kong consumers would like to order Korean products in bulk.
Average Sales Volume vs Total Sales Revenue
While there is no big difference in the average sales volume of the two countries, Japanese products have generated four times higher total sales revenue than Korean products. The total sales revenue is roughly calculated by summing up all the products' prices x sales volume. In addition to the similar average sales volume, Japanese products even have smaller average prices than Korean products, but resulted in four times higher total sales revenue (Chart 5). The fact that there are twice more Japanese products on market is not sufficient to explain these large gaps in total sales revenue. The possible reason is that Japanese products' sales volume has several outliers having a large value as shown in Chart 6.
Average Price and Sales Volume (Korea vs Japan)
Chart 5
Chart 6
Boxplots for Price (Korea vs Japan)
Japanese products are more likely to be treated as luxury brands than Korean products
According to Table 3, Korean products' price correlates negatively with their sales volume by -0.333, while Japanese goods are positively correlated by 0.041. The Law of Demand states the inverse relationship between price and quantity demanded. In Chart 7, Korean products follow the Law of Demand in which a higher price results in a lower sale volume, while Japanese products violate it in which a higher price leads to a slightly higher sale volume. It is noteworthy to find out why Japanese products are not following the Law of Demand.
The violation of the Law of Demand can occur under some market conditions; however, the most common case is luxury goods. People tend to consume more luxury goods as the price rises because they think the higher price represents a higher reputation. Although the correlation coefficient of Japanese products is very weak, it still reflects that Japanese beauty product has a trait of luxury goods. Chart 5 indicates that Korean products have a higher average price than Japanese products. Regardless of this fact, Hong Kong consumers remain to recognize that Japanese products are closer to luxury goods than Korean products.
Chart 7
SUMMARY
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Korean products are the most dominant in the 'beauty and health' category of HKTV Mall.
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Unexpectedly, the 'Gadgets and Electronics' category rarely sells Korean products.
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Korean products have been well-positioned in Hong Kong online market.
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Japanese products generate four times more sales revenue than Korean products.
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Hong Kong consumers tend to treat Japanese beauty products as luxury goods.
© 2022 by Jungeun Melissa Eom