Vietnamese manufacturers fear they could be seriously affected if Thai products gain control of the country’s distribution network as domestic cosmetics have been overshadowed by the multinationals due to a lack of innovation and promotional strategies.
In the last five years, there has been an influx of interest from Thai food, cosmetic, garment, and electronic industries looking to partner with local brands to boost future bilateral trade.
As it stands today, around 90% of the country’s cosmetics sector is comprised of foreign companies, due to widespread distribution channels.
Struggling with strategy
While Vietnam’s cosmetics players strive to upgrade their technology; most of them are small and medium companies struggling to catch up with the output of multinational R&D labs.
However, some regional analysts argue that the quality of these cosmetics are not far from that of international players but that the issue lies in the strategy of developing their products as well as advertising campaigns that local consumers can relate to.
For example, personal care brands like Da Lan and P/S toothpaste were until recently, trademarks that accounted for up to 95% of market share in Vietnam but have disappeared from the market, due to 'strategic moves' by foreign companies.
Investment is being made to strengthen local workforces though…
Various international companies are reported to be giving back though; investing in training courses to improve the standard and efficiency of Vietnam’s workforce.
The country’s government is also in the process of lining up its legal frameworks with international best practices, updating technology, and certifying materials and equipment to create a stable condition for local and global businesses.
Southeast Asia emerging as the place to be for business
As South East Asia increasingly promises lucrative opportunities for the cosmetics industry, international players like AkzoNobel have really been investing their efforts in the likes of Vietnam, Thailand, India, and Indonesia.
In fact, prior to its announcement regarding Vietnam late last year, AkzoNobel confirmed its plan for a €30m Thailand-based facility.
The project, supported by the Thailand Board of Investment, is a 120,000m2 site in Chonburi dedicated to performance coatings for various industries.