Natural Cosmetics Vietnam: Research on Vietnam cosmetics market 2023

Research on Vietnam cosmetics market

According to the ASEAN definition of cosmetics, “cosmetic” refers to any substance or product intended to come into contact with the outside of the human body (epidermal, hair system, fingernails, toenails, lips, and external genitalia) or to come into contact with teeth, oral mucosa, the sole or main purpose of which is Is to clean, season, change their appearance and/or improve their body odor and/or protect them or keep them in good condition.

ASEAN

ASEAN, the full name of the Association of Southeast Asian Nations, is a regional intergovernmental organization with ten member states in Southeast Asia. The organization was established on 8 August 1967 when founding members Indonesia, Malaysia, the Philippines, Singapore and Thailand signed the ASEAN Declaration in Bangkok, Thailand. Brunei later joined Darussalam, Vietnam, Laos, Myanmar and Cambodia as member states.

The main objectives of ASEAN are to promote economic growth, social progress and cultural development in the region while ensuring peace, stability and security. ASEAN seeks to achieve these goals through cooperation and collaboration among its member states in various fields including trade, investment, finance, human resources development, agriculture, tourism and transportation.

The organization operates based on three main pillars: the ASEAN Political-Security Community, the ASEAN Economic Community, and the ASEAN Socio-Cultural Community.

The ASEAN Political-Security Community focuses on promoting peace, stability, and security in the region through diplomatic and security cooperation, conflict prevention, and resolution. The ASEAN Regional Forum (ARF) is the primary mechanism for promoting security cooperation among member states.
The ASEAN Economic Community aims to promote economic integration and cooperation among member states through the free flow of goods, services, investment, and skilled labor. The ASEAN Free Trade Area (AFTA) and ASEAN-China Free Trade Area (ACFTA) are examples of initiatives aimed at reducing trade barriers among member states.
The ASEAN Socio-Cultural Community aims to promote social progress and cultural development in the region by enhancing education, human development, health, and environmental sustainability.

ASEAN also plays a significant role in promoting cooperation and collaboration among its member states and other countries and international organizations in the region. ASEAN has established partnerships with China, Japan, South Korea, India, and the United States, among others.

In summary, ASEAN is an organization that promotes economic, social, and cultural cooperation and integration among its member states while ensuring peace, stability, and security in the region.

“In modern life, cosmetics have become an indispensable product. Every day people brush their teeth with toothpaste, wash their face with facial cleanser, protect their skin with sunscreen, wash and straighten their hair with shampoo and conditioner, use body wash… everyone seems to need cosmetics. The only difference is which brand they choose.” – Dr. Nguyen Van Minh – Vice President – Vietnam Cosmetic – Essential Oil – Aroma Association.

The Vietnam Cosmetic – Essential Oil – Aroma Association (VCEA)

The Vietnam Cosmetic – Essential Oil – Aroma Association (VCEA) is a professional organization established to promote the development and growth of the cosmetics, essential oil, and aroma industry in Vietnam. The VCEA was established in 2006 and operates under the guidance of the Vietnam Chamber of Commerce and Industry.

The VCEA’s main objective is to promote and protect the interests of its members, who are manufacturers, importers, and distributors of cosmetic products, essential oils, and aroma products in Vietnam. The association provides a platform for its members to network, exchange ideas, and collaborate on industry-related issues.

The VCEA is also responsible for setting standards and guidelines for the industry to ensure that products are safe, effective, and comply with relevant regulations. The association works closely with the Vietnamese government, regulatory agencies, and other industry organizations to promote the growth and development of the industry while ensuring consumer safety.

In addition to promoting the industry, the VCEA is also involved in promoting the use of natural and organic ingredients in cosmetic and aroma products. The association encourages its members to use sustainable and environmentally friendly practices in the manufacturing and distribution of their products.

The VCEA also provides training and educational programs for its members to enhance their knowledge and skills in the industry. The association conducts seminars, workshops, and training programs on various topics related to cosmetic, essential oil, and aroma products, including product development, regulatory compliance, and marketing.

In summary, the Vietnam Cosmetic – Essential Oil – Aroma Association is a professional organization established to promote and protect the interests of the cosmetics, essential oil, and aroma industry in Vietnam. The VCEA sets standards and guidelines for the industry, promotes sustainable and environmentally friendly practices, provides training and education for its members, and works closely with government agencies and other industry organizations to promote the growth and development of the industry.

Natural Cosmetics Vietnam: Research on Vietnam cosmetics market 2023

The Vietnamese cosmetics market seems to be booming. Hundreds of thousands of cosmetic brands are most diverse in the form of representative offices, branches, distributors, start-ups, and factory buildings. Almost all world famous brands are present in Vietnam. Among them, there are Estee Lauder, Lancome, Shiseido, Fendi, Lower, Clareline, L’Oreal and other high-end cosmetic brands. Some domestic brands have also established a certain position in the market, such as Sai Gon, Thorakao, Lana, Biona, Xmen, Thai Duong, etc.

Estee Lauder

Estee Lauder is a multinational beauty and skincare company that was founded in 1946 by Estee Lauder and her husband Joseph Lauder. The company is headquartered in New York City and operates in more than 150 countries worldwide.

Estee Lauder offers a wide range of beauty and skincare products, including makeup, fragrances, skincare, and hair care. Some of the company’s most popular brands include Estee Lauder, Clinique, MAC, La Mer, Bobbi Brown, and Jo Malone.

The company’s products are sold through various channels, including department stores, specialty retailers, online platforms, and Estee Lauder’s own stores. Estee Lauder also operates spas and salons that offer personalized beauty services and treatments.

In addition to its products and services, Estee Lauder is known for its commitment to social responsibility and sustainability. The company has implemented several initiatives to reduce its environmental impact, including the use of renewable energy sources, reduction of waste, and sustainable packaging.

Estee Lauder also supports various charitable organizations through its philanthropic arm, the Estee Lauder Companies Charitable Foundation. The foundation supports causes related to health, education, and the environment, among others.

Estee Lauder has received numerous awards and recognitions for its products, services, and corporate social responsibility initiatives. The company is known for its innovation, high-quality products, and commitment to customer satisfaction.

Cosmetics made in Vietnam are competitive because it can benefit from it and attract the right market segment. Vietnamese cosmetics focus on urban and rural parity. For example, Thorakao’s products are strong in cleansing lines, face masks with natural herbal extracts; Lana brand is popular for makeup removers and skin care masks. Xmen is known for men’s products and more.

In future, Vietnam cosmetics market will require domestic enterprises to pay more attention to package, design, PR branding, promotion and product distribution.

The Vietnam cosmetics market is now turning over about 15,000 billion VND/year (700 million USD). According to Nielsen, Vietnamese consumers spend an average of US$4 per person per year on cosmetics, compared with US$20 for Thais. Vietnamese cosmetics companies, which account for only 10% of the market size, are trying to regain this attractive market. It provides the Vietnamese cosmetics market with the potential for more companies to seize and consolidate their strength. Vietnamese cosmetics companies (No. 14) can only maintain low prices and export to neighboring markets (90% of Vietnamese cosmetics companies distribute foreign cosmetics branches). Foreign cosmetics have outstanding performance in major shopping malls.

Real situation of domestic cosmetics enteprises

Sai Gon Cosmetics Company’s sales channels are mainly concentrated in rural areas and wet markets, and it sells about 500,000 bottles of perfume per year at an average price of VND 60,000 per 50ml bottle. Exports to Cambodia, Laos, Thailand…account for 40% of the company’s turnover. However, so far, the company’s fragrance line still exists in malls, which is a disadvantage, especially for beauty products. Similarly, Lan Hao-Thorakao Cosmetics Company has achieved a 30% increase in domestic sales in recent years, but the main source of income still comes from exports.

Natural Cosmetics Vietnam: Research on Vietnam cosmetics market 2023

Over the years, Vietnamese cosmetics companies have been trying to develop through technology, but due to their small and medium scale, they cannot compete with large companies. In the luxury category, foreign cosmetics dominate as domestic players do not have enough budget for product development and brand promotion activities.

Finding the reasons for the low operating efficiency of Vietnamese cosmetics companies

Vietnamese cosmetics only pay attention to quality, ignoring packaging, design, brand… lost in the domestic market.
Some brands see exports as their main target market rather than the domestic market, so they spend little on advertising in Vietnam. Therefore, even high-quality domestic products have low consumer awareness. Vietnamese consumers do not use local cosmetics because they do not know enough about the brands. Are there too few ads? Vietnamese cosmetics brands and products remain unknown to consumers due to insufficient investment in large-scale branding and advertising.
There is no reputable brand name and distribution is limited. For women, makeup reflects their stylist and class. At the same time, Vietnamese cosmetics have not yet gained high popularity. Also, the quality of cosmetics in Vietnam is not really consistent between cosmetics and skincare, leading many consumers to use Vietnamese skincare alongside basically foreign cosmetics.
In the cosmetic industry, almost all manufacturers have to buy raw materials from certain suppliers, such as chemicals from Germany, herbal essential oils from France or plant, flower raw materials from India, Philippines… . The rest depends on each company’s recipes, secrets and recipes. Above all, brand strategy remains decisive. According to many cosmetic experts, imported products may be more conducive to investment strategies than previously imported ingredients.

Current opportunities for Vietnam cosmetics

Vietnam has fully implemented the ASEAN Cosmetics Document, which stipulates a common set of rules for the management of cosmetics among member countries. Therefore, the quality of cosmetics in Vietnam is not inferior to that of many other countries.

Vietnamese cosmetics are becoming more and more professional. The staff are well trained and knowledgeable about products, usage and beauty treatments and are available to advise on any client request.
Female customers use Vietnamese cosmetics mainly because they are cheap, of acceptable quality, and compatible with almost all Vietnamese skins.
Vietnamese cosmetics companies do their own thing, do not spend money on advertising, but compete silently by improving quality and price. “Advertising budgets can be used to contribute more loyal customers (discount promotions, thank you gifts, etc.), invest in product improvements, and increase perks for top salespeople.”
Vietnamese cosmetics companies need to clarify their competitive strategies
Many local companies are following the trend of natural cosmetics. They are quick to use local natural ingredients to develop new ones based on mint, fennel, turmeric, carob, ginger, lemon, grapefruit, cucumber…or vera, aloe vera, moringa, fat sea, mineral mud, spirulina, etc. series of products.

The ASEAN Cosmetics Document (ACD)

The ASEAN Cosmetics Document (ACD) is a set of guidelines and regulations established by the ASEAN Cosmetic Committee to ensure the safety, quality, and efficacy of cosmetic products sold in the ASEAN region. The ACD serves as a reference for regulatory authorities, manufacturers, importers, and distributors of cosmetic products in ASEAN member states.

The ACD covers various aspects of cosmetic products, including their composition, labeling, packaging, and claims. It includes guidelines for product safety assessment, testing, and evaluation, as well as requirements for product registration and notification.

The ACD also includes a list of prohibited and restricted substances that should not be used in cosmetic products. This list is periodically updated to reflect the latest scientific evidence and regulatory changes.

The ACD aims to promote harmonization of cosmetic regulations among ASEAN member states and to facilitate the free movement of cosmetic products within the region. It also aims to ensure consumer safety and to protect public health by establishing standards for cosmetic product quality and safety.

The ACD is periodically reviewed and updated to ensure that it remains relevant and up-to-date with the latest scientific and technological developments. ASEAN member states are encouraged to adopt and implement the ACD in their national regulations and to work together to strengthen regulatory harmonization and cooperation.

In summary, the ASEAN Cosmetics Document is a set of guidelines and regulations established by the ASEAN Cosmetic Committee to ensure the safety, quality, and efficacy of cosmetic products sold in the ASEAN region. The ACD covers various aspects of cosmetic products, including their composition, labeling, packaging, and claims, and aims to promote regulatory harmonization and consumer safety.

Vietnamese high-quality cosmetics with a good pricing policy are a suitable choice and have gained a place in the domestic market.

The company Sai Gon Cosmetics “has not only harnessed the power of the fragrance but also developed new packaging with a contemporary style. Crystals were imported from France to ensure purity and transparency while maintaining the Vietnamese spirit with the image of girls from different rural areas.” Usually , the company focuses on supermarkets in big cities and has opened workshops to showcase luxury goods. * At the end of 2013, Vinh Tan Technology Ltd. built factories for melasma ointment, facial cleanser, and fat sea ointment, using modern production lines imported from Japan, with an annual production capacity of 43 million pieces.
After successfully using moringa in the production of pastries, instant noodles and other foods, TMTM launched the Tara moringa skin care set for domestic and foreign markets in 2013.
Recently, Hoa Thien Phu Cosmeceutical Company officially entered the market with the launch of Sac Ngoc Khang Cream. This is the pioneer in combining pills and creams for maximum skin care results. The company announced that it has opted for an independent distribution channel, primarily through pharmacies, to improve product reliability. There are many foreign melasma products on the market, but only a few cater to target customers through pharmacies.

Challenges for Vietnamese cosmetics companies in future

There are two obvious trends in foreign direct investment cosmetics companies entering the Vietnamese market. First, they enter the market through direct investment, Korean company DeBON Cosmetics is a typical example. Since 1997, Depont has gradually occupied the Vietnamese market share by building a factory in Vietnam. The growth rate of the company sometimes reaches 30% / year.

Challenges for Vietnamese cosmetics companies in future

Korean company DeBON Cosmetics

DeBON Cosmetics is a South Korean beauty company that specializes in developing and manufacturing high-quality skincare products. The company was founded in 2005 and is headquartered in Seoul, South Korea.

DeBON Cosmetics’ product line includes a wide range of skincare products, including cleansers, toners, serums, moisturizers, masks, and sunscreens. The company is known for using natural ingredients, such as plant extracts and herbal essences, in its products to provide gentle yet effective skincare solutions.

DeBON Cosmetics places a strong emphasis on research and development, with a team of experts dedicated to developing new and innovative skincare formulas. The company also invests heavily in advanced technology and production processes to ensure the highest level of quality and safety for its products.

One of DeBON Cosmetics’ signature products is its Gold Collagen Ampoule, a highly concentrated serum that contains gold nanoparticles and collagen to help reduce the appearance of fine lines and wrinkles, improve skin elasticity, and provide deep hydration.

The company also offers a range of skincare products specifically designed for men, as well as a line of anti-aging products for mature skin.

DeBON Cosmetics exports its products to more than 20 countries worldwide, including the United States, Canada, China, Japan, and the United Kingdom. The company has won several awards for its products, including the Korea Brand Award and the Korean Consumer Satisfaction Index (KCSI) award.

In summary, DeBON Cosmetics is a South Korean beauty company that specializes in developing and manufacturing high-quality skincare products. The company uses natural ingredients and advanced technology to create innovative skincare formulas, and its products are known for their effectiveness and quality. DeBON Cosmetics exports its products to over 20 countries worldwide and has won several awards for its products.

If the import tax is reduced to 0% in the next few years, there is a high probability that it will lead to major changes in the cosmetics market, especially when the transaction rate is still very attractive.

The second way is to sell cosmetics directly through franchising. Shiseido is the most typical example. This is a well-known Japanese cosmetic brand introduced and distributed in Vietnam in 1997 by Thuy Loc Company. The brand has won the Vietnamese market through retail chains opened in several cities across the country, mainly in Hanoi and Ho Chi Minh City. Afterwards, many small investors in Vietnam participated in the expansion of the retail network led by Thuy Loc.

Due to the preferential policies in recent years, many foreign direct investment cosmetic companies find it easier to invest in production and enter the Vietnamese market. However, since 2015, Vietnam has signed and complied with a series of agreements such as the ASEAN Trade in Goods Agreement (ATIGA), the ASEAN-China Free Trade Area (ACFTA), the ASEAN-Korea Free Trade Area (AKFTA), and the ASEAN-India Free Trade Area. Trade Area (AIFTA), Vietnam-Japan Economic Partnership Agreement (VJEPA), the import tax rate of almost all products will be reduced to 0-5%. Investment incentives for cosmetics will no longer be attractive due to high investment costs.

“If the cosmetics import tax is reduced to 0%, some cosmetics companies will stop producing in Vietnam and focus on import and distribution. Two-thirds of foreign direct investment companies investing in cosmetics have stopped producing in Vietnam.”

Challenges for Vietnamese cosmetics companies in future

Trade Area (AIFTA)

The ASEAN-India Free Trade Area (AIFTA) is a free trade agreement between the ten member states of the Association of Southeast Asian Nations (ASEAN) and India. It was signed in 2009 and came into effect on January 1, 2010.

The AIFTA aims to promote trade and investment between ASEAN member states and India by reducing or eliminating tariffs on goods and services traded between the two regions. The agreement covers a wide range of sectors, including agriculture, manufacturing, and services.

Under the AIFTA, ASEAN member states and India have agreed to gradually reduce or eliminate tariffs on goods traded between the two regions. This will help to lower the cost of imports and exports, making it easier for businesses in both regions to trade with each other.

The agreement also includes provisions for the protection of intellectual property rights, the elimination of non-tariff barriers to trade, and the promotion of investment flows between ASEAN member states and India.

The AIFTA is expected to benefit both ASEAN member states and India by providing greater market access for their respective products and services. It is also expected to promote regional integration and strengthen economic ties between the two regions.

Since the implementation of the AIFTA, trade between ASEAN member states and India has increased significantly. The agreement has helped to create new opportunities for businesses and has contributed to the economic growth and development of both regions.

In summary, the ASEAN-India Free Trade Area (AIFTA) is a free trade agreement between ASEAN member states and India that aims to promote trade and investment between the two regions. The agreement reduces or eliminates tariffs on goods and services traded between the two regions and includes provisions for the protection of intellectual property rights and the promotion of investment flows. The AIFTA is expected to benefit both ASEAN member states and India by providing greater market access for their respective products and services.

Challenges for Vietnamese cosmetics companies in future

Natural Cosmetics Vietnam: Research on Vietnam cosmetics market 2023