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Vietnam’s Emerging Cosmetics Industry has a Strong Potential to Grow

Although Vietnam’s cosmetics industry is still young, it is one of the fastest growing in the region. Vietnam’s consumers are more conscious of beauty and personal care products as well as satisfying their basic needs, as the living standard rises. In this article, we analyze the current market situation, challenges, and opportunities for businesses looking to enter this sector. It has a potential market value of US$ 2.3billion in 2021.

Vietnam is a major market for cosmetics. This industry is flourishing due to the large number of Vietnamese consumers who invest in personal care products and beauty products that offer higher living standards.

Vietnam has become a middle-income country after being a low-income nation. There is an increase in middle-income people who spend more money on cosmetics. Vietnam’s middle-class females spend an average of VND 450,000 to VND 500,000 (US$19-US$21) per month on skincare and makeup.

The soaring beauty product demand in Vietnam is due to rising disposable income, changing beauty standards, social media and the Korean wave.

South Korea is known for its makeup and skincare. Korean influencers and idols are a great source of inspiration for Vietnam’s self-care trends through social media, ads, and beauty blogs. In Vietnam, women are more financially independent than men due to the evolving beauty standards and increased beauty care needs.

The percentage of Vietnamese women who use cosmetics has increased from 76 to 86 percent since 2018. Vietnam’s cosmetics industry is expected to grow by 15-20% annually over the next ten years.

Vietnam’s skin-care product market was valued at US$850m in 2019, and is expected to grow to US$1.9billion by 2027. This indicates a CAGR in the 2021-2027 period of 11.7 percent.

A market overview of cosmetics

Vietnam is a major importer of foreign cosmetics brands, with as much as 93 percent of imported personal care products coming from abroad. South Korea is the largest cosmetics exporter to Vietnam. Thailand, Japan, Europe and the USA are close behind.

CountryMarket share in cosmetics
South Korea30%
The EU23%
Japan17%
Thailand13%
The USA10%
Source: US Department of Commerce

China and Singapore are also exporters of personal and beauty care products. Domestic brands account for less than 10% of total consumption. Domestic brands tend to focus on lower-cost, affordable products that are priced competitively.

The dominance of foreign players in the market is due to the preference of the Vietnamese for imported products. Vietnamese consumers believe foreign brands are better quality and offer more products to suit their individual needs.

In 2019, Vietnam imported approximately US$950 million worth of beauty products. Facial cleansers, moisturizers, lipsticks and other beauty products are the most popular imports from Vietnam.

Opening of new retail outlets like Watsons and Guardian and Pharmacity and Matsumoto has helped increase the availability of imported cosmetics products to middle class and affluent customers in Vietnam.

Recognizing the potential of Vietnam’s young market, high-end cosmetics companies from abroad have opened representative offices in Vietnam or sold through distributors and agents such as:

  • Unilever: Up to 12 percent market share, with the famous brand Pond’s
  • Beiersdorf Vietnam: Nivea
  • LG Vina Cosmetics Ohui (high-end), The Face Shop
  • AmorePacific Vietnam: Laneige, Innisfree
  • L’Oreal Vietnam Co Ltd : L’Oreal

There are some domestic brands that have earned some recognition, such as Thorakao Cosmetics, Saigon Cosmetics, Lana and Sao Thai Duong.

Since 2019, the revenue of Vietnam’s cosmetics market has been steadily rising for all segments, with implications for 2023.

The revenue over the years in US$ millions:

YearEyesFaceLipsNatural Cosmetics
2019141.7103.7112.949.5
2020142103.1112.949.3
2021153.5110.912253.2
2022f165.4119.3131.557.4
2023f177.6128.3141.461.9
Source: Statista

The market’s two largest segments are eye and lip products. They have generated over US$100 millions annually since 2018. Although natural cosmetics are a less successful sector, they have huge growth potential over the medium term. People are increasingly shifting their attention to natural, organic and herbal cosmetics, which are considered to be healthier and more eco-friendly than chemical-based ones.

New and existing players face both challenges and opportunities

Vietnamese are more concerned about their health and paying attention to what beauty products are on the market. This has created new opportunities for cosmetics businesses looking to expand beyond their existing market or for newcomers who wish to enter Vietnam’s personal care and cosmetics markets.

Two main reasons investors should consider domestic production and distribution of organic beauty products are:

First, Vietnam is a country that has a lot of natural and organic ingredients that can be used in beauty products. One such ingredient is coconut, which is plentiful in Vietnam’s Mekong delta region. It is essential in many beauty products.

These ingredients are followed by aloe vera and green tea. Vietnam is home to many organic ingredients, which makes it a great base for companies looking to produce organic products in their country.

Second, local consumers are changing their minds about quality personal care products. This is especially true for Generation Z. The beauty market will see tremendous growth for organic and herbal products. The big players are already changing. L’Oreal, market leader in hair dye, launched Inoa, a product that is oil-based, ammonia-free, and Nivea by Beiersdorf introduced their natural skincare line.

Besides, cosmetology industry is very popular and growing quickly in Vietnam. Cosmetics from Europe with safe and highly effective ingredients that are clinically proven and meet European production standards are widely used in beauty salons, spas, dermatology hospitals, skin clinics… New beauty technologies, especially from Europe and Korea such as mesotherapy, needling, filter,… are increasingly popular and an indispensable part of the monthly skin care routine of urban young women. Therefore, cosmeceuticals or specialized cosmetics for spa treatments have great potential for development in Vietnam.

Vietnamese people are also very fond of domestic body care cosmetics from Europe, Korea, Japan and Thailand such as shower gel, shampoo, armpit roller… These are items with reasonable prices. , good quality, widely sold in supermarkets or chains specializing in health and beauty.

Yet challenges remain. The cosmetics market in Vietnam, which is young and insecure, is a major problem. The Korean wave is a major driver of high demand for cosmetics products. The market for cosmetics in Vietnam is vulnerable because Korean trends change frequently. The cosmetics market is also heavily influenced by celebrity endorsements from Korean celebrities. The popularity of one product over another can have a significant impact on sales and adds to a company’s problems.

The market is also highly price sensitive. A large number of consumers are young and have lower incomes so they prefer products at the lower end to high-end. It is crucial that cosmetics and personal-care companies keep their prices as close to Vietnamese consumers’ purchasing power as possible in order to compete.

Due to consumer stereotypes, the cosmetics market in Vietnam presents challenges for Western brands. Due to differences in physical characteristics, consumers believe that Asian-made products suit their skin better than European-made.

The problem can be solved if Western brands demonstrate a strong commitment towards quality, since Vietnamese consumers are more focused on quality ingredients.

What makes Vietnam’s market worthwhile to invest in?

The most frequently asked question in Vietnam is “What makes Vietnam such a profitable market?”

Not to be overlooked is that Vietnam has a 10 % VAT rate and a 10-27% tariff rate for cosmetics. CIF (cost-insurance, freight) is used to calculate the import duty for beauty products. This tariff is quite high in comparison to other countries within the region.

Import duty has pushed up the cost of most imported beauty products. To get a shampoo product that is comparable in price in Vietnam, consumers must spend US$3.42 (VND80,000) while the equivalent product in Germany costs US$2 (VND 466,000).

Because of this disparity in prices, Vietnamese consumers spend more on cosmetics and other self-care products than those of developed countries. This means that Vietnamese consumers are willing to pay more for high-quality and high-demand beauty products. Investors have an opportunity to invest in this market, which is young but hungry for imported products.

Essential requirements for exporting cosmetics to Vietnam

The Drug Administration of Vietnam (DAV) is responsible for the registration of imported cosmetics in Vietnam. It is part of the Ministry of Health. These government agencies require that every exporter and importer obtain the appropriate certificates. All cosmetics and personal-care products imported must be registered with MOH. The packaging must contain the following information:

  • Name and functions of the product
  • Formula with the listed ingredients
  • Usage guidance
  • Country of origin
  • Name and address (written in Vietnamese)
  • Weight, volume
  • Manufacturing and expiry dates
  • Number of manufacturing lots

Cosmetic notification procedure

The following documents should be prepared by businesses that import or distribute cosmetics and personal-care products in Vietnam:

  1. Two copies of the Notification Form with the Proclamation Data
  2. Legalized original or notarized copy of the Letter of Authorization signed by the product manufacturer/owner, which allows the registrant distribution of the products on the Vietnam market.
  3. Legalized original or notarized copy of valid certificate of free sale (CFS). The CFS will not be applicable to products manufactured in a country that is a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, (CPTPP), or ASEAN.

You can then submit the required documents online to the DAV via the Vietnam National single Window. Registration fees are VND 500,000 (US$21.38). It takes 7-10 days for the DAV (US$21,38) to issue the result. A receipt number is also known as the product license number. It is valid for five years from the date of issuance.

Vietnam’s cosmetics market is still very young. This presents both opportunities and challenges for foreign and domestic players. The market will only continue to grow as cosmetics and skincare have become an everyday ritual for many Vietnamese consumers. Vietnam has a lot to offer cosmetics and personal-care companies, with a large supply of organic ingredients and a rising demand.

We would assist you in finding business partners or distributors to start selling your cosmetics in Vietnam without much initial investment. Contact us now!

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