[Company Visit] Growing Chinese Color Cosmetics Market... Coloray Fully Prepared

Number 1 in China's Market Share for Cosmetic Pearl Luster Pigments... Listed on Domestic Stock Market
Plans to Produce Synthetic Mica at New Factory to Lower Cost Ratio... Annual Production of 6000 Tons

Coloray is the leading company in China for pearl luster pigments used in cosmetics. Pearl luster pigments are the shimmering pearls commonly found in products like eyeshadows. Since they are mainly used in color cosmetics, performance somewhat slowed during the COVID-19 pandemic. However, with the recent shift to an endemic phase, the cosmetics market in China is regaining momentum. In response to this growing market, Coloray is actively making moves.

Coloray inventory warehouse. Pearl products are waiting to be shipped.
Photo by Jang Hyowon

Operating a Smart Factory... Plans to Establish One of the World’s Top 3 Synthetic Mica Plants

On the 24th, Asia Economy visited Coloray’s headquarters located in Deqing County, Huzhou City, Zhejiang Province, China. Upon entering, we encountered a large truck loaded with Coloray’s pearl products. Despite it being the weekend, the factory was bustling with activity.

Deqing County, where Coloray is based, is a small city with a population of 550,000 designated as a Chinese economic special zone. Although the population is small, 13 listed companies have their headquarters here, befitting its status as an economic zone. Coloray is the only company listed on the Korean stock market here. Deqing County provides support of 13 million yuan (approximately 2.35 billion KRW) to companies that get listed. Coloray also received this support after its KOSDAQ listing in 2017.

Coloray Pearl products are being manufactured.
Photo by Jang Hyowon

At Coloray’s Deqing factory, natural mica and synthetic mica flakes are purchased and finely ground into mica powder, which is then used to produce pearl luster pigments. The factory has an annual production capacity of 10,800 tons of pearl products. Coloray’s core technology lies in its coating process. The color changes depending on how the mica powder is coated. The company holds 115 intellectual property rights related to this technology, far surpassing its competitor, China’s F company, which holds only 10.

Notably, Coloray’s second factory was built as a smart factory. Most of the product manufacturing process, from production management to integration and analysis of information system data, is automated. Inside the factory, control rooms equipped with monitors and control systems are located at each production facility. Coloray also received subsidies from Deqing County for establishing the smart factory. Deqing supports 12% of construction costs and 30% of software development costs as smart factory subsidies.

To reduce costs, Coloray plans to produce synthetic mica in-house. On the 21st, it announced a new facility investment worth 14.3 billion KRW. The new plant’s production capacity (CAPA) is expected to be 6,000 tons annually, making it one of the world’s top three synthetic mica production bases.

Managing production facilities at the Coloray Smart Factory Command and Control Room.
Photo by Jang Hyowon

"In-house Synthetic Mica Production to Increase Operating Profit Margin by 10%"

At Coloray’s headquarters, Chairman Zuo Zhongbiao expressed confidence that producing synthetic mica in-house could increase the operating profit margin by 5 to 10%. Chairman Zuo said, “Purchasing synthetic mica externally costs about 2 million KRW per ton, but producing it ourselves reduces the cost to 1.1 million KRW per ton. Of the total 6,000 tons capacity, half will be used by Coloray, and the rest will be sold to increase sales and profits.”

Producing synthetic mica internally is also expected to make it easier to manage heavy metal standards in markets like the U.S. and Europe. Recently, demand for Free Titanium Dioxide (Free-TiO2) products has been increasing in Europe. Additionally, global cosmetics companies, which are Coloray’s clients, are highly sensitive to heavy metal regulations such as chromium restrictions. Since synthetic mica is artificially made, it has the advantage of controllable heavy metal content.

Zhou Zhongbiao, Chairman of Coloray, is explaining the smart factory production facility. / Photo by Jang Hyowon

Chairman Zuo stated, “Since the Chinese economy has not fully recovered post-COVID, we expect Coloray’s sales growth this year to recover to about 60-70% of 2019 levels. Despite the downturn caused by COVID, we developed over 200 new products in preparation for the post-COVID era, and from the second half of this year, titanium-free products will contribute to sales growth.”

Furthermore, Coloray is considering establishing overseas factories and acquiring ODM and OEM companies to prepare for U.S.-China tensions. The strategy is to establish bases outside China to ensure stable exports to the U.S. Chairman Zuo emphasized, “We plan mergers and acquisitions (M&A) and factory establishments in countries with good relations with the U.S., including South Korea and Southeast Asia. At the same time, we are working to improve performance domestically by consolidating dealerships, so we expect to become a better company next year.”

This content was produced with the assistance of AI translation services.