Posted 24.07. 2018 by Cekindo / Last update on 9.03. 2021
The US International Trade Administration report draws the global investors’ attention to Vietnam as a country with the highest market potential to import cosmetic products.
The US$ 704.2 million worth of the cosmetic market (Nielsen 2013) shows a consistent 33% annual growth in market demand for foreign beauty products, the highest projected growth rate compared to its Asian competitors such as Hong Kong at -2%, Japan at -14%, and South Korea at 15%.
Major global beauty giants such as L’Oreal, Ohui, Estee Lauder, The Body Shop, and popular competitive Korean brands dominate 90% of the domestic market share, leaving local brands struggling to compete.
Yet don’t fear the giants; the market is booming rapidly. The projected annual market growth rate of 35% promises a flourishing demand that continuously produces new opportunities for foreign FMCG businesses to excel.
TABLE OF CONTENTS
Korean beauty goods dominate the Vietnamese market share at 30% as a result of the successful integration of Korean popular culture in Vietnam. Local consumers associate Korean and Japanese products with youthful, affordable yet high-quality. They perceive European and American beauty products with trust, good quality, and “brands for adults”.
Local consumers have the highest preferences towards cosmetics that help them deal with the harsh tropical climate that is also highly polluted. Consumer trend consistently gears towards multifunctional beauty solutions. They must have high UV protection.
They should also be suitable for high humidity for the respective skin and hair types. The increasing demand from the region’s men offers opportunities in both personal care and grooming products.
Baby and Child Care Products
The national consensus has projected population growth of approximately 1 million people every year over the next two decades.
The estimation when coupling with the doubling in size of the middle-class population makes baby and child care products the top 3 of export opportunities for medium-to-high-end foreign brands.
Green or Natural Products
The soaring demand for natural cosmetics will help double Vietnam’s total value of cosmetic import from US$2 billion in 2016 to US$3 – 4 billion by the end of 2018.
Local brand leaders such as Saigon Cosmetics JSC (SCC) reported that natural shampoo and organic perfume products are already generating over 30% of the company’s total revenue.
This number will only be growing from here across the cosmetic market as a result of proactive collaboration between global beauty partners and local brands.
The introduction of the 2007 ASEAN Cosmetics Directive, ingredient requirements to claims, labelling prescribed lists, and other compliance requirements make the product registration process challenging. Below is a list of requirements to import cosmetic products:
HS Code is the legal identification of a product when entering a country. The HS code of a product determines the tax rates that will be applied to the item. Check the respective HS Codes on the national tariff database.
Due to the recent structural change in the government to liberalise the economy, the Vietnamese government has been updating their tariff and tax regulations regularly with inconsistent implementation.
Contact us to determine exactly what taxes will be applied to your product and what tax exemptions that would benefit your business.
It is mandatory for a business to have a legal representative in Vietnam to conduct any trading business.
Finding a local distributor is possible but not highly recommended due to the high tendency of fraudulence that could risk you the ownership over your product and your sales revenue.
It is highly recommended that you set up a Wholly-Foreign Owned Company or find a reliable local partner. Cekindo’s legal experts can advise you on both matters, send us questions and receive your answers within 24 hours.
You can find a local organization or local individuals to be the legal authority responsible for placing the products in the market and for administrative communication with the Drug Administration of Vietnam.
If you choose to partner with a local distributor, Cekindo could assist you in finding reliable distributors and trading agents in Vietnam.
Additionally, Cekindo could conduct a background check of your potential distributors to evaluate the reliability of your potential partners. Contact us for more information regarding our due diligence research service.
Setting up a company in Vietnam can take between 1 to 3 months. The product registration process may take an additional 20-25 days.
Tax requirements vary depending on the origin of your product. The general requirement for tax regulations include:
For further discussion about Vietnam cosmetic market and import guidance, you can contact us by filling the form below.