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Overseas Brands Look to Carve Up Vietnam's Growing Cosmetics Market

Small but beautifully formed as it may be, Vietnam's cosmetics sector has caught the attention of the industry giants, with many of them keen to build their brands in what is set to become one of Asia's prime health and beauty markets.

Photo: Looking good and feeling great: Face-mask technology set to appeal to Vietnamese vanity.
Looking good and feeling great: Face-mask technology set to appeal to Vietnamese vanity.
Photo: Looking good and feeling great: Face-mask technology set to appeal to Vietnamese vanity.
Looking good and feeling great: Face-mask technology set to appeal to Vietnamese vanity.

While, in global terms, Vietnam's cosmetics market may appear relatively small, its rapid expansion – in line with the continuing rise of a distinct middle-class demographic – has seen it punching well above its weight when it comes to attracting the attention of the international brands that dominate sales in the more developed economies. With the country's middle-class population expected to surge from its 2014 level of 12 million to 33 million by 2020, many cosmetics manufacturers are clearly intent on staking their claim at this early stage, believing that nurturing brand awareness and fostering brand loyalty will pay a huge dividend when the market fully matures.

This year, according to data from Mintel, a London-headquartered global market-research firm, Vietnam's cosmetics market is expected to be worth about US$2.3 billion. On a per-capita basis, this works out at $4 per person, well below the $20 per person average for Thailand and placing Vietnam well down the league of Asia's big cosmetics-buying nations.

At present, overseas brands enjoy a 90% share of Vietnam's cosmetics market, with South Korea heading the Asian supplier contingent. With Korean music, fashion and TV / movie content hugely popular across Asia, its success in the cosmetics sector should hardly come as a surprise, especially as the 2015 Vietnam-South Korea Free Trade Agreement has done much to ease the flow of imports and exports between the two countries.

According to figures provided by the Ho Chi Minh City (HCMC) Society of Cosmetics Chemists, South Korea accounts for the largest proportion of overseas-sourced cosmetic sales in Vietnam with a 30% market share. The EU is in second place with 23%, followed by Japan (17%), Thailand (13%) and the US (10%), with sundry other nations contributing a combined 7%. Despite the assurances of these Ho Chi Minh City chemists, however, this may not be a wholly accurate depiction of the market share, given the wide range of cosmetic surgical procedures, beauty treatments, therapies and anti-aging preparations that are making a significant contribution to the growth of the sector, while their point of origin is somewhat harder to determine.

This, then, was the background to this year's Cosmobeauté Vietnam, the HCMC-hosted event that bills itself as "Vietnam's largest beauty trade exhibition". Reflecting the cosmopolitan nature of the market, the event attracted 210 exhibitors from 19 territories.

Among these was Singapore-based Aesthetics Marketing Asia, an 11-year veteran of the event. With offices in Singapore, Malaysia and Vietnam, the company specialises in the provision of diagnostic and beauty equipment for clinics and consultants in the health and beauty sectors. This year, the company's stand was notably busy, with many visitors intrigued by the offer of free cosmetic procedure demonstrations and gratis beauty consultations with a Russian cosmetics specialist flown in especially for the event.

Reflecting on the growth of both his own business and the show itself, company Director Trần Thanh Long said: "We aim to sell the latest beauty technology from all around the world, with our products primarily from South Korea, France and Japan. As with this show, we've got bigger with every passing year."

Photo: PDO threading: All the rage across Asia. Apparently.
PDO threading: All the rage across Asia. Apparently.
Photo: PDO threading: All the rage across Asia. Apparently.
PDO threading: All the rage across Asia. Apparently.
Photo: EFFI’LA: Too pricey for value-minded Vietnamese.
EFFI'LA: Too pricey for the value-minded Vietnamese.
Photo: EFFI’LA: Too pricey for value-minded Vietnamese.
EFFI'LA: Too pricey for the value-minded Vietnamese.

Preeminent among the previously mentioned South Korean contingent was Seoul-based White Medience, one of the leading suppliers of the suture needles and related equipment required to perform Polydioxanone (PDO) Threading, a non-surgical, anti-aging face lift procedure that is currently very much in demand across Asia.

Explaining the appeal of this particular cosmetic treatment, Nguyen Truong Duy, a Sales Representative with the company, said: "Holding back the aging effect is one of the most common cosmetic concerns for people the world over, with Vietnam being no exception. In order to deliver on this, we work with qualified doctors and consult extensively with our clients to understand their exact requirements.

"When it comes to the PDO threading procedures, many opt for this as it is safer than undergoing a course of Botox or subjecting themselves to a number of other chemical-based treatments. We are actually attending this show in order to meet anyone interested in PDO threading, whether they be distributors, traders or potential patients."

Apart from innovative, minimally invasive anti-aging treatments, one of the other preoccupations of cosmetics-minded consumers is a distinct preference for products solely made from natural ingredients and that have been produced in a wholly environmentally-friendly fashion. One company that sees itself as somewhat ahead of the game in this regard is Seoul-based A. by BOM, whose natural face mask range has frequently been endorsed by several Korean celebrities.

Spelling out the company's actual offer, Sales Representative Zheng Menji said: "The 'A' in our name represents atelier, an artist's workshop, while Bom is the Korean word for Spring. The name was chosen as it reflects the artistic values of the company, which focuses on taking care of people and nature, while striving to create harmony between the two. In line with this, all our products are solely made from natural ingredients – rice, beans, camellia, jasmine, lotus, eoseongcho, black teas…"

Despite their commitment to using natural ingredients, Korean companies still manage to deliver cosmetics products at a price point that endears them far more to Vietnamese consumers than to, say, their Taiwanese competitors. Indeed, Doreen Wen, a Marketing Executive with EFFI'LA Cosmetic, a Taichung City-based skincare products manufacturer, noticeably felt it was less than an even playing field when it came to facing-off with Korean companies.

Clearly with something of an axe to grind, she said: "Taiwanese products are still a bit too expensive for Vietnamese consumers. Unlike Korean companies, we are not government-subsidised and, as a result, we can't compete with them in terms of price. Thanks to the support of their government, they can charge lower prices than those of their international rivals and frequently clean up as a result."

It wasn't just Taiwanese businesses that were struggling to compete on price terms, with Cosgene Pro-Biotech, a New Jersey-based skincare brand, also wondering if its range was just too pricey for the Vietnamese market. Addressing this, a company spokesperson said: "While we initially came here to suss out the size of the market for our products, we've been a little disappointed in what we've found. Given the quality of our products, we have to charge a premium price – that price, though, I think may well be too high for local buyers."

As with South Korea, Spain is another country where the government actively supports the local cosmetics sector, particularly when it comes to building up export orders. It is partly down to this government largesse that Spain is now ranked as one of the top 10 beauty products suppliers on a global basis.

It was this state-sponsored new business drive that saw six Spanish cosmetics firms finding their way to HCMC. Here they jointly participated in an official national pavilion, all courtesy of Susana Arranze, International Manager of the Spanish Cosmetic, Toiletry and Perfumery Association.

Among her sponsored delegates was Rafael Simon, Export Manager for PostQuam Professional, a northwest Spain-based supplier of hairdressing products, professional salon equipment, make-up and nutritional supplements. Pressed as to whether the 22,000 km roundtrip had been worthwhile, he said: "We are primarily here to find distributors and, so far, we have got plenty of leads. As we will now need to go through a due-diligence procedure before we can move things any further along, I will have to get back to you on that one…"

Photo: Cosmobeauté Vietnam 2018: Where Taiwanese skincare meets non-invasive Korean facelifts.
Cosmobeauté Vietnam 2018: Where Taiwanese skincare meets non-invasive Korean facelifts.
Photo: Cosmobeauté Vietnam 2018: Where Taiwanese skincare meets non-invasive Korean facelifts.
Cosmobeauté Vietnam 2018: Where Taiwanese skincare meets non-invasive Korean facelifts.

Cosmobeauté Vietnam 2018 took place from 19-21 April at Ho Chi Minh City's Saigon Exhibition & Convention Center.

Marilyn Balcita, Special Correspondent, Ho Chu Minh City

Content provided by Picture: HKTDC Research
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