That is the conclusion drawn by a recent conference held in Ho Chi Minh City last week, when delegates spoke of a lack of investment in developing domestic brands and improving packaging.
In recent years many of the top players throughout the region, particularly the highly successful South Korean cosmetics company, have successfully broadened their footprint on the market, according to a report in the Viet Nam News, part of the government-run Vietnam News Agency.
Although the market for cosmetics and personal care remains relatively small right now, fast economic development is feeding strong growth for many consumer goods industries, making the conditions perfect for early market entry.
According to latest figure from market research company Mintel, the market for beauty and personal care is estimated to be worth $1.78 billion, a figure that should reach $2.35 billion by 2018.
This represents a CAGR of 9.7% over the course of that three year period, one of the fastest growth rates in the world right now.
Although the market remains a relatively small one, this spectacular growth is expected to translate into double-digit value gains in most beauty and personal care categories, including body care, colour cosmetics, fragrances, facial care, soap, bath and shower, hair care and sun care.
Who will reap the benefits?
But Vietnamese authorities are worried that this tremendous growth potential is going to be exploited by foreign companies, leaving the smaller domestic players behind.
“Vietnamese cosmetic products have only a 10 per cent market share [though] they can easily compete with foreign ones in terms of quality,” said the deputy chairman of Vietnam Essential Oils, Aromatherapy and Cosmetics Association in an interview with the Viet Name News.
“However, the companies have focused on quality but not invested in developing their brands. They do not use eye-catching packaging.”
Currently there are thought to be only 14 Vietnamese cosmetics manufacturers that focus on mainly face and hand products, leaving the gap to be filled by bigger international players.
According to official statistic 30% of the market is carved out by the big Korean players such as LG and AmorePacific, while the EU accounts for approximately 23%, Japan on 17%, Thailand on 13%, and the remaining market share comprising US and other countries.