South Korean Small Business Exports Hit $33.4 Billion Q3 Record as K-Beauty and Chips Surge — But Auto Sales Collapse 42%

By Kekeletso Nkele, small.news Assistant

(small.news) — South Korean small and medium-sized enterprise exports reached a third-quarter record of $33.4 billion between July and September 2026, an 8.8% increase from the same period a year earlier, driven mainly by strong overseas demand for cosmetics and semiconductors, the Ministry of SMEs and Startups reported on October 26, reports Korea JoongAng Daily.

Cumulative exports for the first nine months of 2026 rose 9.5% year on year to $96.5 billion. The number of Korean SMEs actively exporting goods increased 1.6% to 90,765 — also a record.

K-Beauty Brands Scaled Online Before Entering Physical Retail

Cosmetics was the standout category. Third quarter cosmetics exports rose 28.6% year-on-year to $2.79 billion, while the nine-month total climbed 26.4% to $7.65 billion — both quarterly records.

Independent Korean beauty brands have driven much of the growth, building international name recognition through online platforms including Amazon and TikTok Shop before expanding into major North American retail chains. That sequencing — online first, physical retail second — has allowed smaller brands to validate demand and reduce market-entry risk before committing to bricks-and-mortar distribution costs.

The geographic spread of cosmetics exports widened significantly. Shipments to North America grew 33.1% and to Europe 58.6%. Latin America, identified as an emerging market for K-beauty, recorded the sharpest growth at 141.3%. The number of SMEs exporting cosmetics increased 6.3% to 9,469 in the first nine months of the year. Cosmetics accounted for 75.3% of the $470 million in SME exports made through online channels in the third quarter.

Semiconductors and Chipmaking Equipment Hit Records on AI Demand

Semiconductor exports jumped 68.8% to $1.39 billion in the third quarter, and chipmaking equipment exports grew 38.3% to $1.14 billion — both third-quarter records — reflecting sustained global demand for AI-related hardware. Petroleum product exports also rose 29.3% to $660 million, partly due to higher global oil prices.

Automobile Exports Fell 42% on Russian Tax and Middle East Disruption

The sharpest decline came in automobile exports, which fell 42.4% to $1.51 billion in the third quarter. A Russian tax on imported used vehicles drove the drop, reducing shipments to Russia and Central Asia, and instability across the Middle East disrupted export flows in that region. A 66.6% collapse in automobile exports to the United Arab Emirates made the overall decline steeper.

U.S. Overtakes China as Top Export Market

The United States became the largest single destination for Korean SME exports in the third quarter, with shipments rising 19.6% year on year to $5.73 billion. The shift reflects expanding K-beauty distribution networks in the U.S. and growing exports of rechargeable batteries and related materials.

Shim Jae-yoon, director-general for global growth policy at the Ministry of SMEs and Startups, said that despite an unstable external environment, SME exports are gaining ground in major markets such as the United States and in emerging markets such as Latin America. He said the ministry would strengthen support through export vouchers and programs designed to help large companies and SMEs expand overseas together.