Japanese cosmetics company Shiseido has announced the completion of its Vietnamese factory, strengthening its global production system.
The factory represents the company’s 15th manufacturing site worldwide, and is located in the Dong Nai Province. Construction of the factory began in December 2008, and it is expected to become fully operational in April 2010.
According to Shiseido, Vietnam’s favourable geographical and export conditions, (particularly in terms of transport costs) together with the country’s young and vibrant workforce, make it an attractive market in which to establish a production facility.
Main production base of masstige business
The factory will represent the main production base of the company’s masstige business, an area which it intends to fully develop during its three-year-plan that comes into play next year.
The Vietnamese manufacturing site will target the middle-income group in Asia that is topped for significant growth in the future, primarily serving the Japanese market with products such as men’s cosmetics, hair styling agents and facial cleansers.
The $42m (€30.1m) factory will have a production capacity of around 22 million items annually, according to Shiseido, and is expected to have a workforce of around 200 people by the end of 2010.
Strengthening position in Vietnam
Strengthening its presence in the Vietnamese market, Shiseido recently opened a sales subsidiary in the country to tap into the significant growth in the Vietnamese cosmetics market which it has served via a distributor since 1997.
For the fiscal term ending March 2009, overseas sales for the company accounted for 28 per cent of total sales, a percentage which Shiseido aims to increase to more than 50 per cent by 2017.
According to the latest figures from Euromonitor, the cosmetics and toiletries market in Vietnam has increased by 59.8 per cent between 2003 and 2008 to reach a total value of $566.7m.
The market for colour cosmetics has seen the biggest percentage increase in growth, increasing 183.4 per cent to reach $24.6m in 2008, yet it is hair care and oral hygiene that have the biggest market share, accounting for almost two-thirds of the overall market value.