Economic and Trade Mission

Embassy of Israel in Hanoi ,

VIETNAM COSMETICS REVIEW 2016

Market Overview

With a population of over 92 million and over half aged between 35 and below, Vietnam is a very
attractive market for the cosmetic industry.
In the past years, the countrys cosmetic market has been growing at a rate of ~ 30%. This is why
Vietnamese cosmetic market has attracted the attention of many cosmetic global leaders such as
Unilever, LOreal, and P & G.
According to Vietnams Chemical Cosmetic Associations data, around 90% of cosmetics sold in the
country are imported, representing 430 leading cosmetic brands. (NDHMoney 2012.) The main
exporters to Vietnam are Korea, EU, Japan, US and Thailand.
In 2014, retail value sales increased at a slower rate compared with 2013. More stable growth indicates
higher maturity in most product categories. Consumers are also more frugal in their spending due to the
stagnant economy. However, the growth rate is considered to be high and the demand for beauty and
personal care products continued to be fuelled by rising consumer available income as well as
awareness about personal hygiene and appearance, supported by significant marketing efforts by
leading manufacturers. Indeed, more consumers, both men and women, paid more attention to the look,
which is, in turn, leading to the demand for beauty and personal care. This demand is most notable in
large cities such as Ha Noi, Da Nang and Ho Chi Minh City where number of middle and high class
consumers are increasing.
Consumer taste and preference for more sophisticated products are maturing and change to quality
brand names. This is especially so with youth generation.
Compare with other countries in the region, Vietnam is not a major player, however it is an emerging
market with huge potential that has been experiencing impressive growth.

International VS Local
Domestic brands in the country include Saigon Cosmetics, My Hao Chemical Cosmetics and Thorakao
of the Lan Hao Company
The cosmetics industry in Vietnam has many established brand names, but lack of promotional
strategies and innovation of products that meet current market trends. International companies continue

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to lead retail value sales across beauty and personal care. With strong financial capabilities, they invest
in various marketing activities to promote their brands and expand distribution networks to reach out to
more consumers. They also made great efforts to uncover new trends and launched new products to
exploit these trends. Domestic players mainly attract low-income consumers residing in rural areas,
Moreover, many Vietnamese well-known brand names have gradually vanished from the market while
some fell into the hands of foreign companies because of poor competitiveness. (Read more)

Thorakao Vietnamese local brand

Unilever Vietnam International remains the leading player, in a fragmented competitive landscape, with
a retail value share of 12% in 2014. The companys success was derived from strong performances by
brands like Ponds, Hazeline, Dove and Vaseline Intensive Care. Ponds is the top brand in skin care,
while Vaseline Intensive Care was the leading brand in body care.

Natural/ Organic Products

In Vietnam the demand for natural especially organic product is likely to remain and grow over the next
few years. Vietnamese consumers believe that these products are safer, have better quality,
environmental friendly and more effective. In response, manufacturers tend to introduce new products
in line with this trend and emphasis the natural aspects of their products. Products with natural claims
can be easily spotted in hair care, skin care and bath and shower.
Brands such as The Face Shop, Skinfood From Korea and The Body Shop are likely to perform well.
These brands will cover the gap between mass and premium brands, attracting both middle- and high-
income consumers. There are not many organic brands in Vietnam yet.
To compete with each other, manufacturers will have to incorporate natural ingredients in their
formulations, rather than purely highlighting their natural or organic credentials.

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Vietnamese women are willing to pay > USD 1000 for a set of SKii

The faceshop Cleansing Foam

The Body Shop, Organic Drops of Youth

Men Products
Men products are seeing increasing demand. Male consumers have become more aware of the
appearance and professional look.
The growth potential for mens grooming remains very high, because the majority of male consumers
still share beauty and personal care products with their family members. Leading players, such as
Unilever Vietnam International, are likely to introduce new products and run various advertising
campaigns to raise awareness among male consumers toward mens grooming products. Importantly,
there is a rising number of metrosexual men with comprehensive knowledge of beauty and personal
products. This type of consumer tends to look for more premium and sophisticated products which
provide additional benefits, such as anti-ageing, energizing and acne control.

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.
The Faceshop, BB cream for Men Nivea Anti Aging for men

Body Shop, White Musk for Men Ponds men, Coffee Energy charge

Distribution Channels:
- Authorized online shops: this channel is normally used in combination with other physical
shops/ spas to boost the recognition and sales of one distributor. However, there is a non-stated conflict
which is once the products are sold online in any approach, then spas/ skin doctors will stop or refuse to
introduce and sell that products. In Vietnam, this channel is used by mainly un-known Japanese,
Korean brands, and its very difficult to evaluate the quality or price ranges.
- Drug stores/ pharmaceuticals: there are 2 type of stores, private and chain. Having products sold
at this channel, the distributors have to bear a huge cost for advertising/ direct sales/ follow up
activities. In return, they only give around 10% commission for the stores to make up.
This channel is used mainly for medical cosmetics/ cosmetic with laboratories labels from France, US,
and other European brands.
- Counters in Department stores: there is a confusion about the function of the department store.
Department stores dont import directly from manufacturers. They simply rent out the space. The
distributors have to bear the rental cost which occupy in average 30% the sale prices. The practice that
Vietnamese distributors set for this channel is that they will commit importing a certain amount of
order monthly and the manufacturers have to share the cost of rental or sometime they have to pay for
the rental. This channel can be considered as a sales channel for luxurious brands. Some distributors
will invest in a proper showroom which is usually their office. This channel is evaluated with a low sale
performance due to the ability to build trust in the consumers and also the convenient functions.

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- Online shops utilizing social media: this channel at this moment is considered as a very
productive and cost effective approach to bring the product to the consumer. Apart from its advantages
in cost saving, market coverage, it can reduce the position of the products in the market and also create
the unclear competition with the other distribution channel. Most of the products sold in this channel
are the low-recognized or hand-carried products from different countries.
- Spas/ Skin doctors: this channel is mainly for products with laboratories labeled products, less
for self-care products. This channel can give the stability to sales but require lot of investment at
beginning to train spas and doctors. Normally, the distributors will give out 30% of commission apart
from providing printed marketing materials.

Online Marketing

In 2013, according to comScore, Vietnam had more than 16 million internet users, which is the largest
number in Southeast Asia. With rapidly increasing internet penetration in the country, beauty and
personal care manufacturers tend to employ different online tools to promote their products. They often
run online advertisements, such as Google adwords, banners on popular websites and articles on online
newspapers and magazines.
Given the fact that Vietnamese spend nearly triple the time on Facebook than Japanese, As the most
popular social networking site in Vietnam, Facebook has played an increasingly important role in brand
building and raising consumer awareness. Most beauty and personal care brands have created their own
Facebook pages. Via these pages, manufacturers provide consumers with information about new
products, new promotional campaigns or run mini games or contests to attract new followers. In
addition, they can also receive consumer feedback or answer queries directly.
Direct selling companies also pay strong attention to online platforms. The most notable example is
Oriflame Vietnam. Besides expanding its network of distributors in the country, Oriflame Vietnam has
improved its website to help consumers learn more about its products. The companys website is well
designed and user-friendly, providing web surfers with a full description and the price of each product.
Thus, they can easily compare Oriflames products with those of other companies when making their
purchasing decision.

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Minus 417 Vietnams Facebook page Michel Phan, Vietnamese Youtube Blogger

An online shop with 202,469 likes

Israel Market Position

Israel cosmetics brands are generally not well recognized by Vietnamese consumers. However several
brands. Vietnamese consumers have not yet experienced too many Israel brands, therefore they are still
unclear where Israel products are positioned compared with other countries. However, the market
potential for Israel cosmetics is good.
Opportunities
- Brands that carry organic and natural products
- Focus on the area of cosmeceuticals or derma cosmetic, products for skin care problems.
Brands that invest in R&D should emphasize it.
- Baby and Mom products
- Customers who are willing to pay more money for high quality cosmetic products. A customer
can pay up to more than $1000 for a set of cosmetics from SKII

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- Whitening products ARE becoming more and more important. Vietnamese are willing to pay a
lot of money for quality whitening cosmetic products. For example SKII, OHUI

Challenges
- The market is price sensitive and full of low cost products
- Unofficial imported products (smuggled)

- Israel is not well-known in Vietnam Cosmetic industry

- Currently Asian-made cosmetics are more popular than European- made, because they believe
those products are more suitable to their skin.

Cosmetic Distributors in Vietnam

List of major cosmetics importers Brands

An Thinh Phat Trading Company Limited Artego (Italy)

Livegain (Korea)
Pola (Japan)
Global IDEA Company Limited Inebrya (Italy)
Mirato Vietnam Joint Stock Company Mirato (Italy)
TiTiTi Cosmetics Company Limited Affinage (Australia)
Creative Nature Group Davines (Italy)
Four seasons Company Limited Pevonia Botanica (USA)
Phu Thanh Cosmetics Trading Production Company Babay care, paraffin, skin care, body
Limited care, spa products
Vinh Hanh Company Limited Hair care, body care, facial products
Daicata International Company Limited IASO (Korea)
She Spa (Korea)
Thuy Loc Trading Company Limited Shiseido (Japan)
Cle De Peau Beaute (Japan)
Loocitance (French)
ZA, BPI (Korea)
Lyna Trading Company Limited Activa (Italy)
Peter Thomasroth (Australia)
Sharp & Botanica (Italy)

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Salozo Cosmetics Company Alfaparf Milano, Salonzo-Oyster

(Italy)
Alonzo (Australia)
Perfect beauty Company Limited Elgon, Brelil (Italy)
S-Net Vietnam Joint Stock Company Phytos (Italy)
Farma vita (Italy)
Nam Tran Pharma Trading Company Limited Foltne (Italy)
Nam Dao Company Limited Wella (United States)
System Professional, Clairol skin care

Natural Joint Stock Company Harn & Thann (Thailand)

Viet Lotus The Face Shop (Korea)
Ky Phong Import-Export & Trading Company Lanopearl (Australia)
Limited
Thuy Duong Avene (French)
Trading Company Limited Elancy (French)
C.T Group Laneige (Korea)
Lolita Lempicka
Guess
Police
OPI
Red Earth
Zirh
Khuong and Le Investment Trading Company Menard (Japan)
Limited

Product Registration:
Generally speaking, product registration is a pretty straight forward process. Israeli exporters are
advised to check the registration process required for their products and follow this process strictly.

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Embassy of Israel in Hanoi ,

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Embassy of Israel in Hanoi ,

Further Reading:

http://www.taiwantrade.com.tw/EP/tt/news-detail/en_US/147650
http://s3.amazonaws.com/zanran_storage/www.eki.mdh.se/ContentPages/44154843.pdf#page=27
http://www.euromonitor.com/beauty-and-personal-care-in-vietnam/report
http://www.cosmeticsdesign-asia.com/Business-Financial/Vietnamese-cosmetics-expansion-still-
limited-in-Asia
http://www.saigon-gpdaily.com.vn/Business/2013/1/104008/

Disclaimer:
This review is not a recommendation to take action or refrain from taking an action. This document is for reference only.

Written by Ms. VO Phuong Quynh, Senior Business Development Officer

April 2016

About us

The Economic & Trade Mission at the Embassy of Israel in Vietnam aims to enhance the business relations between
the two countries by arranging a wide range of activities through which mutual trust and cooperation can be achieved.

For further information

The Economic and Trade Mission, the Embassy of Israel in Vietnam

Add: 68 Nguyen Thai Hoc Str., Ba Dinh Dist., Hanoi, Vietnam
Tel: (84 4) 3843 3140 (ext. 513, 514)
Website: http://itrade.gov.il/vietnam
Email: [email protected]
LinkedIn: http://vn.linkedin.com/pub/israel-economic-trade-mission-in-vietnam/34/a93/839
Facebook: https://www.facebook.com/IsraelinVietnam
Skype: zafrirasaf

Ho Chi Minh City Economic and Trade Office:

Email: [email protected]

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