S.Korean firms foraying into cosmetics market
Dominic Oh, CEO of Kintex, said at a press conference on February 23 that the Korean firm was joining hands with Informa and Vietnam National Trade Fair & Advertising Company (Vinexad) to organize Mekong Beauty Show 2017.
The cosmetics and beauty care products exhibition is expected to feature more than 200 companies from Europe, Korea, Thailand, Malaysia, Singapore, Indonesia, Japan, Hong Kong, India and Vietnam. Particularly, said Oh, about 80 of them will come from Korea and this will be their first Vietnam visit aimed at searching for importers and distributors.
Korean cosmetics companies are keen on Vietnam as one of the most potential markets in the region, he said, for the country has achieved GDP growth of over 6% over the years and people aged less than 35 account for 60% of the Vietnamese population.
Nguyen Van Minh, vice chairman of the Vietnam Cosmetics, Essential Oils and Aromas Association, said the domestic cosmetics market had been growing rapidly, with revenue estimated at US$1.2 billion last year, a figure that had been forecast for 2020. The market’s growth has shown no signs of abating in near future.
A source from Saigon Cosmetics Company cited a study as saying that Vietnam’s cosmetics market is holding high growth potential, with double-digit growth projected for years to come. Total cosmetics revenue in 2015 was put at of VND26 trillion, the source noted.
Local consumer spending on cosmetics is now 4-5 times lower than in other regional countries. The middle class whose demand for beauty care is rising fast is expected to double to 33 million people by 2020.
The same source from Saigon Cosmetics Company said the cosmetics market is now more vibrant than ever, especially when Vietnam is taking part in a series of free trade agreements, in which import duties on beauty care goods will fall to 0-5%.
Despite such potential, local enterprises have remained weak in terms of technology and finances. As a result, the home market is currently dominated by foreign cosmetics brands. Some 90% of the market is in the hands of foreign firms while the remaining 10% is shared by domestic enterprises which mainly focus on the low-end segment.
