In 1997, while starting LCC, I received a request from Gusko, the CEO of Nivea Seoul, to find a company that could produce and supply lip care products. Away from LG and independently expanded Nivea's business in Korea, He felt the need to diversify the product line-up, which was heavily focused on lotions and creams. Since I was busy with site selection and factory construction, it was difficult to add new items. Furthermore, neither LG nor I had any production experience, so I began exploring outsourcing companies and met with 'Kolmar' to request an estimate for OEM production. The annual quantity was only around 200,000 to 300,000 pieces, and the estimated price turned out to be very high. Therefore, I made the judgment that it would be more profitable and advantageous in terms of product diversity to import and sell the products from Germany instead.

I made a request to Gusko, "What if our LCC produces and supplies Lip Care?" He responded with a skeptical reaction, questioning whether we could do it since we had no production experience. I confidently exclaimed that if we were given the recipe and since lipstick production and manufacturing processes are similar, and LG had been producing various lipstick products, there would be no problem with production and supply. Then, I chased after LG and approached the production team leader and researchers in the cosmetics department, questioning them about the key points of manufacturing, filling, packaging equipment, and processes, in order to prepare for production

In the corner of the second floor of the first factory, we set up simple production equipment, including a small mixer, intermediate product trays, molds, and a refrigerator. With these facilities, we were able to produce around 200,000 pieces annually. It was a far cry from the current mass production system and automated filling and packaging processes. These were manual work equipment from a primitive era, so to speak. Particularly, the process involved pouring the mixture into trays weighing around 25kg to create slab cakes, which were then broken and manually melted in the mixer for manual filling whenever there was a production plan.

In the early 2000s, the domestic market for Lip Care was mostly dominated by products from 'Sanga Pharmaceuticals'. Being a seasonal product mainly for winter, it was considered a small market with less than 5 million pieces sold annually, and major companies showed little interest in it. As expected, when the globally recognized Nivea Lip Care was launched, domestic products lost their competitiveness. Nivea quickly gained a market share of over 50%, and global brands like Chapstick flooded into the Korean market. With Nivea's product lineup focused on body lotion and hand cream, it faced difficulties in terms of sales growth and profitability due to intense competition.

However, as Nivea Seoul during this period, the sale of nearly 10 million Lip Care products annually became a significant revenue of 16million USD, serving as a cash cow that helped turn the company into profitability.

On May 9th, From the President of Unilever, I received a congratulatory plaque for achieving the milestone of exporting 100 million pieces of Lip Care (L/C) to the United States. I also expressed gratitude for our collaboration over the years. Vaseline L/C, which was developed and launched as an ODM product in March 2018, reached 5 million pieces in the same year and has been growing by over 20% annually, reaching 26.4 million pieces in 2022. It seems that achieving 35 million pieces this year is more than feasible. In any case, exporting 100 million pieces in just four years is an impressive quantity, considering the domestic annual demand of 12 million pieces. Based on a piece price of 3 USD, it amounts to a staggering 36 million USD in revenue. Moreover, considering the annual demand in the US of 200 million pieces and a market share of 15%, exporting 30 million pieces per year, with an expected increase to 40 million pieces and a market share of 20% next year, and a production capacity of up to 80 million pieces, the market share could potentially surge to 30%.

After its initial launch in the US in March 2018, Vaseline L/C proved to have excellent quality and competitive pricing. As a result, our sales partner, Unilever, continuously requested us to have a supply capacity of over 50 million pieces. However, considering the fierce competition in the US market with global products, we weren't confident that such a large quantity could be sold. Moreover, the prospect of investing over 5 million USD and the risk of facing difficulties if sales declined added to our hesitation in doubling our production capacity. Additionally, the planned expansion site for the fifth factory was already designated for mouthwash product, making it even more challenging to secure additional space.

After months of contemplation, a new idea came to mind. Since the mixing, filling, and packaging processes were all carried out in three factories simultaneously, I realized that it would be beneficial to expand and separate the packaging operations in the new 3rd floor of the upcoming fifth mouthwash factory. This idea was brilliant because the filling products were already stocked as inventory, making it easy to separate the factories without any issues. We relocated the existing 4 lines of blister packaging from the three factories to the third floor of the fifth factory and expanded the filling equipment by adding 4 more lines, resulting in a total of 8 production lines. To ensure price competitiveness, it was crucial to streamline the logistics flow. Therefore, we changed the process from using Cap-Mechanic supplies individually to utilizing all raw materials on pallets. Additionally, we relocated all Lip Care-related imported materials from the import storage within the raw material warehouse to the 3rd Factory converting the previous product warehouse into a Cap-Mechanic warehouse, further optimizing the logistics flow.

(Filling and finished product warehouses moved to the 5th factory) Furthermore, to prevent frequent troubles in the supply line of intermediate products, we vertically integrated the lines and implemented heat tracing and insulation for convenient automatic supply and prevention of safety accidents. We also established comprehensive measures to prevent safety accidents in the extraction process, effectively eliminating finger injuries as safety incidents.

With a daily 8-hour (single-shift) operation, our annual production capacity is 80 million pieces. While we cannot precisely determine the capacities of other global companies, it is certain that LCC, following Germany's Nivea by BDF and the US's Chapstick, holds a production capacity that ranks among the top in the world. Having a capacity of 80 million pieces while facing a domestic demand of 12 million pieces annually, LCC's ability to export 30 to 40 million pieces to the highly competitive US market demonstrates our quality and competitive pricing.

The cost of raw materials is only a fraction of the cost of purchasing auxiliary materials, especially Cap and Mechanic components, which play a crucial role in determining the price competitiveness of Lip Care products. After receiving quotes from domestic specialized companies and determining that exporting would be impossible at those prices, we extensively searched for Chinese suppliers and finalized our current collaboration. While their facilities and quality may be somewhat inferior, CEO's passion has led to significant quality improvements, and we are confident that this trend will continue. Additionally, the automation of blister packaging, which requires significant manpower, has been revolutionary, leading to cost savings and ensuring competitive pricing.

These processes were inspired by ideas borrowed from LG toothbrushes' blister packaging and the labeling equipment used for Labelling Lip Care products. Moving forward, to enhance export competitiveness, diverse packaging methods need to be developed. Efforts should continue to reduce labor costs through the automation of secondary packaging for Labelling Lip Care products and the development of cartoning equipment. Moreover, if automation is applied to the extraction and capping processes in the filling room, and efforts are made to improve stick insertion and box packaging in the packaging process, our product will excel with quality and price competitiveness, achieving global recognition.

Our LCC, now surpassing 26 years since its establishment, has been able to pursue the dream of becoming a century-old company by choosing not the broad path but the narrow path, focusing on niche markets where underdogs can prevail over giants, much like the battle between David and Goliath.

From the early stages of our business, we have produced OEM and ODM products while also developing our own brand, 'ORIOX' targeting niche markets such as Sauna cosmetics, Daiso stores, and dispenser mouthwash products. The successful entry into the Japanese market with 'Propolinse Mouthwash' which is the special concept mouthwash containing a large amount of propolis, and the successful penetration of the US market with Vaseline Lip Care, are considered the results of our strategy to target global niche markets. We are also expecting another success story in the US market with the entry of dispenser mouthwash, which has seen significant investments in development and marketing, as we pioneer yet another niche market.

CEO BAIK, SUNGCHUN