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| J. One Cosmetic’s Hong Shot ad featuring trot singer Hong Jin-young / Courtesy of J. One |
By Kim Jae-heun
Mid-sized cosmetics company J. One Cosmetic filed a complaint with the Fair Trade Commission against beauty product manufacturer Cosmax for forcing it to pay for 200,000 sets of makeup products at an unwanted extra cost of over 2.4 billion won ($2.02 million).
Cosmax is an original design manufacturer (ODM) of cosmetics, making beauty products for business-to-consumer companies to buy and sell as their own. It is not well-known to the public, despite having the highest global sales in the industry. J. One is one such client company that has been outsourcing its product manufacturing to Cosmax since June 2015.
J. One has accused Cosmax of abusing its power by unilaterally producing a surplus of products beyond J. One’s order volume and forcing it to pay for them.
On July 3, 2018, J. One launched a new brand called “Hong Shot” in collaboration with popular trot singer Hong Jin-young. It outsourced 20,000 beauty products to be manufactured by Cosmax, which sold out instantly. The following month, J. One placed two more orders totaling 17,000 additional foundation cosmetics products.
But the ODM firm allegedly requested the cosmetics company expand its order to 200,000 sets of the foundation if it wanted to receive the Hong Shot beauty products on time.
“Cosmax said the job could be completed faster if we made a larger order. We were concerned about oversupply after having already ordered 17,000 sets of foundation products, but we had no choice but to accept Cosmax’s demands in order to maintain a good relationship and receive our products quickly,” J. One’s CEO said.
J. One booked the order first before placing it so it could adjust specific details in the contract later.
However, Cosmax began manufacturing the beauty products before J. One confirmed the order, and despite being asked to halt production, it delivered the completed order to the cosmetics firm’s warehouse.
J. One was given a bill for 2.46 billion won in production costs.
“It was not the deal we agreed to. We even asked for a delay in the manufacturing. However, Cosmax ignored our requests,” J. One’s CEO said.
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Source: Buhay Kapa PH
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