OEM vs ODM vs Private Label vs Brand Sourcing: What Actually Changes in a Korean Cosmetics Project

The short answer: OEM and ODM describe contracts, but obligations follow the type of business

One of the first questions brand founders ask is whether their project is OEM, ODM or private label. The distinction is genuinely useful in practice. It decides who designs the formulation, how much can still be changed, and how the development schedule runs.

Under Korea's Cosmetics Act, however, those words do not set obligations. What the law looks at is which business you are running. So when you choose a route, the things worth comparing are not the labels but three questions. Who designs the formulation and which documents can you receive, which business type will you register as, and who tests and records what before the product goes out.

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1. The law divides the field into three businesses

The Cosmetics Act (Act No. 20901, in force from 2 April 2026), Article 2-2(1), lists three types of business under the Act: the cosmetics manufacturing business, the cosmetics responsible distribution business, and the customised cosmetics sales business. Article 2-2(2) delegates their detailed types and scope to Presidential Decree.

The definitions sit in Article 2 of the same Act. Subparagraph 10 defines the cosmetics manufacturing business as the business of manufacturing all or part of a cosmetic product, while excluding processes consisting only of secondary packaging or labelling. Subparagraph 11 defines the cosmetics responsible distribution business as the business of distributing and selling cosmetics while managing their quality, safety and related matters, or of brokering and delivering cosmetics for the purpose of import-agency transactions. Subparagraph 12 defines the customised cosmetics sales business as the business of selling customised cosmetics.

The procedures differ too. Under Article 3(1), a person who intends to run a cosmetics manufacturing business or a cosmetics responsible distribution business must register with the Minister of Food and Drug Safety as prescribed by Ordinance of the Prime Minister, and the same applies when changing important registered particulars prescribed by that Ordinance. Article 3(3) requires an applicant for responsible distribution registration to meet the standards for quality control and post-distribution safety management prescribed by Ordinance of the Prime Minister and to appoint a responsible distribution manager to administer them. The customised cosmetics sales business, by contrast, is subject to notification under Article 3-2(1).

If your plan is to distribute and sell cosmetics under your own brand, responsible distribution registration is the first thing to check. Which detailed type applies, though, depends on how the transaction is structured, so it is safer to confirm it against the actual trading arrangement before registering.

2. What separates the routes is the detailed type of business

Article 2 of the Enforcement Decree of the Cosmetics Act (Presidential Decree No. 36176, in force from 2 April 2026) sets out the detailed types and scope of each business.

• The cosmetics manufacturing business has three forms: manufacturing cosmetics directly (subparagraph 1, item (a)), manufacturing cosmetics on consignment received from another party (subparagraph 1, item (b)), and packaging cosmetics where only primary packaging is involved (subparagraph 1, item (c)).
• The cosmetics responsible distribution business has four forms: a registered cosmetics manufacturer distributing and selling cosmetics it manufactured itself (subparagraph 2, item (a)); distributing and selling cosmetics manufactured under consignment by a cosmetics manufacturer (subparagraph 2, item (b)); distributing and selling imported cosmetics (subparagraph 2, item (c)); and brokering and delivering cosmetics for import-agency transactions, limited to electronic commerce under Article 2, subparagraph 1 of the Act on the Consumer Protection in Electronic Commerce, Etc. (subparagraph 2, item (d)).
• The customised cosmetics sales business covers selling cosmetics made by adding, to the contents of a manufactured or imported cosmetic, the contents of another cosmetic or a raw material published by the Minister of Food and Drug Safety, and mixing them (subparagraph 3, item (a)), and selling cosmetics made by repackaging the contents of a manufactured or imported cosmetic into smaller units (subparagraph 3, item (b)).

Laying the industry's vocabulary over that map, the correspondence generally reads as follows. A product made by a Korean manufacturer and distributed under your own brand generally corresponds to item (b) of subparagraph 2, whether you call it OEM, ODM or private label. Brand sourcing, where a finished product is imported and then distributed, generally corresponds to item (c), and e-commerce import agency to item (d). Running your own plant and selling what it makes brings manufacturing registration and item (a) together.

One point is worth stating plainly. The expressions OEM, ODM, private label, white label and brand sourcing do not appear in the main text of the Cosmetics Act, its Enforcement Decree or its Enforcement Rule. That was checked against the provisions in force on the Korea Law Information Center on 21 September 2026. These are words from contracts and from the trade, not registration categories. It is therefore common for two companies using the same word to mean quite different scopes. Before comparing quotations, it is faster to agree on what the word means to each side.

3. First difference: who designs the formulation, and which documents you can receive

Article 11(1), subparagraph 2 of the Enforcement Rule of the Cosmetics Act (Ordinance of the Prime Minister No. 2109, in force from 2 April 2026) requires a cosmetics manufacturer to prepare and keep the manufacturing control standard document, the product standard document, the manufacturing control record and the quality control record. Electronic formats are included.

Subparagraph 6 of the same paragraph requires the manufacturer to submit to the responsible distributor whichever of those particulars are necessary for quality control, with a proviso allowing the submission to be omitted in two cases. Item (a) is where the cosmetics manufacturer and the responsible distributor are the same person. Item (b) is where the cosmetics manufacturer manufactures the product by designing, developing and producing it, and the information constitutes a trade secret under a mutual contract between the manufacturer and the responsible distributor, within a scope that does not affect quality and safety management.

A transaction the trade calls ODM can fall within item (b). What matters is that all three of those conditions have to hold together. So a manufacturer-led formulation does not automatically close the documents off, and a brand that asks for everything does not automatically receive all of it.

The proviso is also only an exception to a duty to submit. Rights over the formulation, meaning whether it can be used elsewhere, whether the brand can take it along, and whether it can be held exclusively for a period, are settled by contract rather than by the legislation. Writing down the list of documents and the scope of rights before development starts makes it far easier to change manufacturers or add products later.

Separately, Article 12, subparagraph 3 of the Enforcement Rule requires the responsible distributor to keep the product standard document and the quality control record received from the manufacturer. Keeping what you receive is the brand's job.

4. Second difference: what registration asks for

Article 4(2) of the Enforcement Rule requires two documents to accompany an application to register a cosmetics responsible distribution business: the rules on standards appropriate for quality control and post-distribution safety management under Article 3(3) of the Act, and a document verifying the qualifications of the responsible distribution manager. The same paragraph provides that these documents are not submitted where item (d) of subparagraph 2 of Article 2 of the Decree applies.

The rule on the responsible distribution manager runs along the same line. Article 8(1) of the Enforcement Rule sets the qualification criteria for the responsible distribution manager a responsible distributor must appoint, and excludes in parentheses a person registered for the responsible distribution business under item (d) of subparagraph 2 of Article 2 of the Decree.

Registration itself records the route. Article 3(4), subparagraph 5 of the Enforcement Rule requires the manufacturing type to be entered in the cosmetics manufacturing registration book, and Article 4(4), subparagraph 6 requires the responsible distribution type to be entered in the responsible distribution registration book. Which route you work through is already on the record at the registration stage.

In short, the e-commerce import-agency form is the lightest, while domestic consigned manufacturing and importing both start from the rules on standards and an appointed manager.

5. Third difference: who does what before the product goes out

Article 12 of the Enforcement Rule sets out the duties of a responsible distributor. Its opening parenthesis states that for a person registered for the responsible distribution business under item (d) of subparagraph 2 of Article 2 of the Decree, only subparagraphs 1 and 2, items (a), (c), (g) and (j) of subparagraph 4, and subparagraph 10 apply. The fact that scope varies by route is written into the provision itself.

If you work through domestic consigned manufacturing, two subparagraphs deserve attention. Subparagraph 5 requires quality testing to be carried out thoroughly for each batch number before distribution, with a proviso that testing may be omitted where the cosmetics manufacturer and the responsible distributor are the same person, or where quality testing has been entrusted to one of the bodies listed in Article 6(2), subparagraph 2 of the Enforcement Rule and results exist for each batch number. Subparagraph 6 requires that, where manufacturing, or quality testing, is entrusted to a manufacturer under item (b) of Article 6(2), subparagraph 2, the responsible distributor supervise the entrusted party thoroughly as to whether manufacturing or quality testing is being carried out properly. It also requires the distributor to receive and maintain the records on manufacturing and quality control, and to carry out quality control of the final product. Consigning production does not move supervision or final quality control away from the brand.

If you work through importing, the records take a different shape. Subparagraph 4 requires an import management record to be prepared and kept for imported cosmetics, listing in items (a) to (j) what must be entered or attached: the product name or the name to be sold in Korea; the specifications and content of raw material ingredients; the country of manufacture and the name and address of the manufacturing company; a copy of the notice of review results for functional cosmetics; a manufacturing and sales certificate; a sample of the product description written in Korean; the date of first import, meaning the customs clearance date; the import date and volume for each batch number; the date and result of quality testing for each batch number; and the sales destination, sales date and sales volume. Item (e), the manufacturing and sales certificate, carries a proviso. Two conditions must both hold for it to be omitted. First, an import and export requirement confirmation agency under the integrated public notice referred to in Article 12(2) of the Foreign Trade Act confirms that the product is the same as a cosmetic imported by a responsible distributor holding such a certificate. Second, the responsible distributor has had testing carried out under its own quality control standards by a body under item (a), (c) or (d) of Article 6(2), subparagraph 2 and holds the test report.

Importing also has its own route to skipping domestic quality testing. Subparagraph 7 allows a person registered under item (c) of subparagraph 2 of Article 2 of the Decree to omit quality testing in Korea where the quality control standards of the manufacturing company in the country of manufacture are mutually recognised between countries, or are recognised as being at or above the level of the Good Manufacturing Practice standard for cosmetics published by the Minister of Food and Drug Safety under Article 11(2), and it provides that in that case the test report of that manufacturing company replaces the quality control record. Subparagraph 8, however, requires anyone taking that route to apply, as the Minister of Food and Drug Safety determines, for an on-site inspection of the manufacturer of the imported cosmetic. Subparagraph 8-2 provides that where the recognition under subparagraph 7 is revoked, the batch-by-batch quality testing under the main text of subparagraph 5 applies again. Subparagraph 9 requires those item (c) registrants to comply with the export and import procedures under the Foreign Trade Act and to file the standard customs clearance pre-declaration as an electronic trade document under the Act on Facilitation of Electronic Trade.

Reporting differs as well. Article 13(1) of the Enforcement Rule requires a responsible distributor to report the previous year's production or import results to the Minister of Food and Drug Safety through a cosmetics industry association by the end of February each year, and Article 13(2) requires the list of raw materials used in the manufacturing process to be reported before the cosmetic is distributed and sold, with the same applying when the reported list changes. Article 13(3) allows a responsible distributor that imports after filing the standard customs clearance pre-declaration as an electronic trade document under the Act on Facilitation of Electronic Trade not to report import results and the raw material list under paragraphs (1) and (2).

6. What does not change with the route

No matter who does the manufacturing, some duties stay in place.

• Article 12, subparagraphs 1 and 2 of the Enforcement Rule require a responsible distributor to comply with the quality control standards in Attached Table 1 and the post-distribution safety management standards in Attached Table 2.
• Subparagraph 10 of the same Article requires that, on becoming aware of new data or information on safety or efficacy that may directly affect public health, the responsible distributor report it to the Minister of Food and Drug Safety in the manner the Minister publishes, and prepare the necessary safety measures. Cases of adverse effects from the use of cosmetics are included. Subparagraphs 1, 2 and 10 all apply to the item (d) registrants noted above.
• On the manufacturing side, Article 11(1), subparagraph 7 of the Enforcement Rule requires the necessary testing, inspection or verification from the receipt of raw materials and packaging materials through to the release of finished products.
• The Good Manufacturing Practice standard for cosmetics is a standard that the Minister of Food and Drug Safety may recommend manufacturers observe under Article 11(2) of the Enforcement Rule, and Article 11(3) provides for support to manufacturers that observe it. It is a structure of recommendation and support rather than a legal obligation.

Labelling and advertising, shelf life and period after opening, and the management duties the brand carries directly also follow you regardless of route. Those are set out separately in what the brand owner still has to do and what you must be able to prove.

7. What to settle before choosing a route

• Who designs the formulation, and what does the contract say about which documents you receive and to what extent once development is finished?
• Can that formulation be used for another product or at another manufacturer? This is a contractual question, not a statutory one.
• Which detailed type under Article 2 of the Decree does this transaction fall under? If the plan involves changing registration type, fix the timing in advance.
• Who buys the containers and packaging components, and who tests and inspects them? When to run that compatibility check is covered in packaging compatibility.
• Do you plan to make a functional claim? What changes the moment you do is set out in the shampoo case.
• What are the quantities and the reorder plan? What to check before the first order is in MOQ and small-batch planning.
• Are the product specifications written down? If not, starting from a product brief is faster.

8. Changing route means changing your registration

Article 5(1), subparagraph 2, item (e) of the Enforcement Rule makes a change of responsible distribution type a ground for a responsible distributor to file a change of registration. Article 5(2) requires the application to be filed within 30 days of the date the ground arose, or within 90 days for a change of address following an administrative district reorganisation.

Item (b) of subparagraph 4 of the same paragraph requires a person registered under the responsible distribution type in item (d) of subparagraph 2 of Article 2 of the Decree to attach the documents under Article 4(2), subparagraphs 1 and 2 when changing to, or adding, the responsible distribution types in items (a) through (c) of subparagraph 2 of Article 2 of the Decree. In other words, if you start with import agency and later move into domestic consigned manufacturing or importing, the documents waived earlier become necessary at that point.

9. Frequently asked questions

Are private label and ODM the same thing?

They are not statutory categories, so companies use them differently. As noted in section 2, in Korea both expressions generally lead to item (b) of subparagraph 2 of Article 2 of the Decree, the business of distributing and selling cosmetics manufactured under consignment by a cosmetics manufacturer. What actually differs is who designs the formulation and how much of it you can still change, so asking about those two points is more precise than asking about the label.

Can we own the formulation?

That is not something the legislation settles; it is settled by contract. Article 11(1), subparagraph 6, item (b) of the Enforcement Rule does allow the submission of the quality-control documents to be omitted where the manufacturer manufactures the product by designing, developing and producing it and the information is a trade secret under a mutual contract, within a scope that does not affect quality and safety management. As set out in section 3, it is worth fixing the scope of the documents you will receive in writing before development begins.

What changes if we import a finished product and sell it under our brand?

The first thing to confirm is whether it falls under the import type in item (c) of subparagraph 2 of Article 2 of the Decree. If it does, the import management record under Article 12, subparagraph 4 of the Enforcement Rule comes in, and omitting domestic quality testing under subparagraphs 7 and 8 presupposes mutual recognition or equivalent-level recognition plus an application for an on-site inspection. Compliance with export and import procedures and the standard customs clearance pre-declaration under subparagraph 9 apply as well.

We registered for e-commerce import agency. How do we move to domestic consigned manufacturing?

As set out in section 8, that is a ground for a change of registration under Article 5(1), subparagraph 2, item (e) of the Enforcement Rule. Under Article 5(2), subparagraph 4, item (b), a person registered under item (d) who changes to or adds the types in items (a) through (c) of subparagraph 2 of Article 2 of the Decree must attach the documents under Article 4(2), subparagraphs 1 and 2, namely the rules on standards and the document verifying the responsible distribution manager's qualifications.

Whatever route we choose, what must the brand always do?

Compliance with the quality control standards and the post-distribution safety management standards under Article 12, subparagraphs 1 and 2 of the Enforcement Rule, and reporting and taking safety measures for new safety or efficacy data and information under subparagraph 10, remain regardless of route. If you choose consigned manufacturing, supervision of the entrusted party and final product quality control under subparagraph 6 are added.

10. Next steps

It is better to settle the route before comparing quotations. For the same product, the schedule and the boundaries of responsibility change depending on which business you register as and which documents you agreed to receive.

EVAS runs planning, design, research, manufacturing, logistics and brand content together in house. Even if you have not decided which route fits, we can work through it with you using the materials and goals you already have. Have a look at how development runs and the formulation library first, and if you have a concrete plan, tell us through a project enquiry. Other articles are in Insights.