Business

Foreign investors eye Vietnam’s cosmetics market

According to the Vietnam Essential Oil Association, increase in cosmetic export turnover from $3 billion in 2016 to $6 billion in 2017 plus plentiful natural materials made Vietnam become an attractive market in foreign producers’ eye.

Makeup products are sold in Ben Thanh Market in District 1 (photo: SGGP)

Makeup products are sold in Ben Thanh Market in District 1 (photo: SGGP)

Informa Beauty team- Division International Director Ms. Claudia Bonfiglioli said its revenue from natural and organic makeup globally is $480 million in 2017, a year-on-year increase of 10 percent. The revenue of natural and organic cosmetics is forecast to double in 2018.
Accordingly, world’s makeup producers are bound to change their normal products into organic kinds. Since then, giant companies’ rising demands for natural materials will be urgent. The Southeast Asian country is eminent as a potential market for investment because of many factors.
With advantage of having plenty of natural materials such as coconut, turmeric, Aloe Vera with cheap cost, Vietnam is an attractive place for international cosmetics investors. Moreover, young labor force at reasonable cost also helps Vietnam become magnetic.
Especially, foreign brands find the Vietnam cosmetics market alluring thanks to its big market share. A representative of Neilsen said that at present, Vietnam’s population is over 100 million; around 60 percent are below the age of 35. Furthermore, average capita is estimated at VND53.5 million (US$2,385), $170 higher than that of 2016.
Revenue of cosmetics exports doubled in 2017 compared to 2016 with 95 percent were from foreign countries into Vietnam.
Medicare director Bart Verheyen said Medicare has so far opened 65 stores of makeup products since it began business in Vietnam in 2011, adding that it would increase twice the number of shops in the next couple years.
Additionally, Bart Verheyen affirmed that natural makeup products would prevail in next time and foreign-owned brands would have much opportunities to grow in the country more than local kinds.
Meanwhile foreign investors are fond of Vietnam’s market with plans of manufacture and distribution expansion, the question is that where local cosmetic makeups are?
Worse, meantime, more and more alien makeups are present everywhere in the country, local cosmetics companies face a drastic shrinking market. Chairman of Vietnam Essential Oil Association Nguyen Van Minh said that only 5 percent of $6 billion cosmetic turnover in 2017 were from local enterprises. Vietnam just exports raw materials of coconut, turmeric, Aloe Vera.
A few popular domestic brands, such as Saigon Cosmetic, Thorakao and Lan Hao are confined to the low value segment.
With small-scale production and limited capital, local enterprises find it hard to improve in short time. The association has many times petitioned related agencies to set up a research center for natural makeup products to produce sources of materials in Vietnam; however, the petition has not been considered.
In the other hand, related agencies neglected supervision of origin of materials for cosmetic, low-quality products are rampant in the market. Many unlicensed enterprises also make cosmetic products, leading to consumers losing reliance on local products; consequently, badly affecting good quality products.
Economists said the government should have policies to encourage local makeup sector grow more. The government needs to build a research center for new products and essence of herbs to make natural makeup products.
Domestic businesses should have access information of organic products in the world for production orientation or else, they will lose its market. In addition to attracting foreign investment generally, the Vietnamese government need to have policies for encouraging the growth of cosmetics.

By AI VAN – Translated by UYEN PHUONG

Other news