Vietnam: Free trade agreements boost cosmetics sector
With the signing of the Trans-Pacific Partnership (TPP) agreement in October 2015, Vietnam will benefit from lower pricing, barrier removal and decreased tariffs by up to 100%, Euromonitor International reports.
While this creates significant trade opportunities for Vietnam, as more international companies will be setting their sights on the Southeast Asian country, domestic players may be pushed out of the market and unable to compete with international names.
Mekong Beauty Show
As the country gears up for its Mekong Beauty Show 2017 on 15-17 June, Vietnamese brands hope that the cosmetics and beauty care products exhibition will place Vietnam on the world’s cosmetics stage and will be successful in building relationships between domestic and overseas companies.
More than 200 companies from the Republic of Korea, Thailand, Malaysia, Singapore, Indonesia, Japan, Hong Kong, India, Vietnam and the EU are expected to attend the three-day event.
Up to 80 of these brands will be key Korean names, looking for import and distribution opportunities in Vietnam.
Innovation to overcome maturity
In recent years, Vietnam has witnessed a reduced growth period with retail value sales slowing in 2015 compared to 2013. Euromonitor International highlights that this is largely the result of many product areas reaching maturity.
The country requires innovation to capture the interest of new target audiences and gain a competitive edge over multinational household names.
Opportunities versus challenges
With the country's strengthened internet network and e-commerce capabilities, domestic companies can offer more products to consumers both in urban and rural areas, and stay on top of trends that align with changing attitudes and behaviours.
However, as the industry jostles with unauthorised products being sold online or via social media platforms through Facebook, Vietnam-born companies may find it difficult to market a brand that is synonymous with high-quality and reasonable prices.
Middle-aged consumers typically prefer international brands and therefore the smaller Vietnamese ones struggle to complete and find their place in the market.
However, with a large population, focused marketing activities and growing distribution channels, coupled with the Trans-Pacific Partnership (TPP) agreement, Vietnam has considerable opportunities to become a key APAC market.