VIETNAM COSMETICS MARKET BRIEF
Market overview
The cosmetics sector in Vietnam is still
developing. Presently, the sale of
cosmetics and beauty products is largely uncontrolled and is plagued by a wide
range of fake, mislabeled, and smuggled products.
The Vietnamese cosmetics market is highly price sensitive and full of
low-cost “knock-offs”. International
cosmetic giants must contend with these challenges when entering the market with
their premium products. Vietnamese consumers typically spend about VND 45,000
(about US$3) per year for cosmetics purchase at local street shops.
Similar beauty products sold at department stores, supermarkets, and
specialty cosmetics shops cost roughly twice as much.
Vietnamese consumers spent US$82 million on beauty and skin care products in 2006. Illegal and unofficial imports are estimated to account for as much as 60 percent of these sales in Vietnam. Currently, Vietnamese women spend US$3 – 4 per capita on cosmetics and beauty products per year. By contrast, other Asian countries spend the following amount per capita: Taiwan (US$41.7), Korea (US$40.9), Hong Kong (US$35.7), Thailand (US$19.5) and China (US$10). Consumer tastes and preferences for more sophisticated products are maturing and shifting towards quality brand names. This is especially so with younger consumers. Foreign companies already in Vietnam recognize the market’s future potential and are advertising aggressively. To capture more market share, local manufacturers are investing in more research and development, as well as marketing and distribution activities to compete with superior international brands. This growing and rapidly developing market offers numerous opportunities for American companies in the following segments: finished beauty products, raw cosmetics material and manufacturing technologies and related equipment for beauty products. Market Size It is estimated that 90-95 percent of
the market for international cosmetics products in Vietnam is centered in the
most cosmopolitan areas of the country, including Ho Chi Minh City in the south
and Hanoi in the north. Relatively
few sales of international cosmetics occur outside of these cities.
The cosmetics market in Ho Chi Minh City is about five times larger than
that of Hanoi. Market Size for Skin Care and
Make-up Products:
Note:
The above statistics are unofficial estimates Vietnamese consumers are still
not as familiar with American brand cosmetics compared with cosmetics from other
countries. Additionally, local
production of brand and non-brand cosmetic products is low compared with the
level of imported beauty products. The market share for cosmetics products by
foreign countries is as follows: Korea
- 30%, EU - 23%, Japan - 17%, Thailand - 13%, US - 10%, and others - 7%.
Best ProspectsThere are hundreds of locally produced brands and other low prestige cosmetics labels from China, Thailand and Taiwan, targeted towards the mass of low-income consumers. Foreign make-up and skin care products are steadily gaining in popularity among Vietnamese consumers. Sales of skin care products are expected to grow at around 10-15 percent annually over the next three years, as this previously untapped market segment becomes cluttered with more and more foreign and domestic brands. Although Vietnamese consumers still prefer skin care products from Europe and Japan, locally produced products account for more than 50 percent of the market for skin care products. The Vietnamese market for make-up products has transformed into a highly segmented one: development, distribution, and market positioning of such products are being targeted to consumer segments based on income, age, gender and profession. This contrasts with an earlier one-size-fits-all product offering evident less than a decade ago. Make-up products are expected to grow by approximately 7 percent per year over the next three years, with increasing demand for make-up products from Korea and Japan. U.S. Market Position
U.S. cosmetics brands are generally
well accepted by Vietnamese consumers. Brands
such as Maybelline, Revlon, and Clinique have done well.
Vietnamese consumers have not yet been exposed to many higher end brands,
such as M.A.C., Guess and Estee Lauder. Given the limited exposure of Vietnamese
consumers to American brands, most consumers are still uncertain where U.S.
products rank in terms of prestige among beauty products.
Several high-end U.S. cosmetics brands are available in the local market
due to smuggling, even though there is no advertising and promotional support to
develop their market share or to cultivate brand awareness.
In sum, the market potential for future sales of US cosmetics is good.
Brand awareness is starting to grow and local consumers are steadily
spending more on cosmetics and beauty products.
Distribution Practices Once suitable local distribution
partners have been identified and selected, an effective distribution strategy
must be formulated and implemented. There
are three options: 1.
Exclusive
national distribution: Identifying and selecting a national distribution company
to be the only licensed wholesaler in Vietnam. 2.
Non-competing
regional distribution: Identifying and selecting different distribution
companies to be the only licensed wholesalers in each of the two primary local
markets, Ho Chi Minh City and Hanoi. 3.
Nationally
tiered distribution: Identifying and selecting a primary national distribution
company to resell to secondary or regional wholesalers.
Since the market in Ho Chi Minh City
for cosmetics and beauty products is much larger than that of Hanoi, it is
advisable to select a primary distribution company based in Ho Chi Minh City.
However, to serve the Hanoi market, a separate sales agent may be
required because of the market’s different characteristics. Regulation & Taxation Regulation: Imported cosmetics and beauty products
must be registered with the Ministry of Health (MoH) for quality assurance and
identification purposes. The
foreign party should have a contract with a local company that allows the
foreign company to change the registration status of previously imported goods
as well as any future imports to a different local distributor with appropriate
notice if any problems should arise between the foreign exporter and the initial
local distributor. The process of
product registration is complex and often confusing to a foreign company.
Local distributors are more familiar with the local requirements and for
that reason can handle product registration easier and more efficiently.
Company registration
There are no regulations requiring
foreign companies to obtain registration prior to exporting cosmetics to
Vietnam. Product registration For products that fall under the
cosmetic categories specified above, the exporter or importer must register the
product with the MoH for quality assurance purposes. A permit must be
obtained from the MoH to import the initial samples required for the health and
safety inspections and quality assurance registration. The term "cosmetics"
encompasses "all substances or manufactured preparations used for direct
application to external areas of the human body or to the teeth, gums or lining
of the mouth with the sole or main purpose of cleansing, perfuming, changing
appearance and body odor, and preserving or maintaining the body in a good
condition" The following items are classified as cosmetics that directly affect human health and welfare and are required to be registered for quality assurance purposes with the MoH for distribution and circulation within Vietnam: - products applied to the skin (hand, face and legs) being creams, liquids, solutions, gels and oils; - face masks (except for products not containing any chemical substance); - all substances with a colour foundation (in the form of liquid, paste or powder); - make-up powders, powder used after showering, hygiene powders; - hygiene soaps, deodorant soaps; - perfumes, hygiene scents and fragrances; - products used when showering and washing (salts, soaps, shampoos, gels); - hair removal products; - deodorant products for the body and anti-perspiration deodorants; - hair care products, such as: hair colouring products, hair colour removal products; hair waving products, products to stretch and set hair; permanent wave products; hair cleansing products (solutions, powders and shampoos); hair nourishing products (solutions, creams and shampoos); hair beauty products (solutions, gels and pomades); - products used when shaving beards (creams, soaps and solutions); - beauty products for the face and eyes; - lipsticks; - teeth and mouth care products; - fingernail and feet care products; - personal hygiene products for ladies; - sunscreen and sun tanning products; - anti-ultraviolet ray protection products; - skin whitening products; - face care (anti-wrinkling) products. Taxation: The Vietnamese Value Added Tax
(VAT) is ten percent. The tariff
rate is reduced from 50 to 30 percent for perfume and fragrant lotion from the
U.S, from 50 to 20-30 percent for cosmetics.
The import duty on cosmetics products is calculated on the CIF value of
the shipment. The VAT tax on
imported goods is based on their CIF value plus the assessed import duty. U.S.
Commercial Service Vietnam Contacts: U.S.
Commercial Service - Hanoi 6 Ngoc Khanh Street, Ba Dinh Dist Ms. Ngo Minh Phuong Tel: (84-4) 831-4650 Fax: (84-4) 831-4540 E-mail: ngo.phuong@mail.doc.gov U.S.
Commercial Service – Ho Chi Minh City 9/F, Saigon Centre Bldg 65 Le Loi Blvd, Ho Chi Minh City,
Vietnam Ms. Nguyen Thi Kieu Huong Tel: (84-8) 825-0490 Fax: (84-8) 825-0491 E-mail: nguyen.huong@mail.doc.gov |
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