A South Korean cosmetic shop in HCM City. Vietnamese cosmetic producers cannot catch up with major foreign players in terms of technology, and the local firms are losing market share.

Vietnamese cosmetic producers are losing their domestic market share because of not investing in developing brands and improving packaging, a conference heard in HCM City last Friday.

Deputy chairman of the VN Essential Oils, Aromatherapy and Cosmetics Association, Nguyen Van Minh told VN News on the sidelines of Essential Oils – Flavours – Cosmetics and Life: “Vietnamese cosmetic products have only a 10 per cent market share [though] they can easily compete with foreign ones in terms of quality.

“However, the companies have focused on quality but not invested in developing their brands. They do not use eye-catching packaging.”

Vietnamese consumers, especially affluent ones, prefer high-quality products but also ones with beautiful packaging, he said.

And, Vietnamese products have failed to do that, he added.

There are only 14 Vietnamese cosmetics manufacturers like Sài Gòn, Thorakao, Lana, Biona, Xman and Thai Duong.

A large proportion of their products, of around 60 per cent, are exported to African countries and Laos and Cambodia.

This is also a reason why they do not bother to advertise much in the domestic market.

Low technologies and a shortage of funds are also reasons for their lack of competitiveness.

Many of them are trying to invest in technologies, but, being small or medium-sized companies, cannot catch up with major foreign players.

At the conference, delegates admitted the companies’ products are mostly face and hand cleansers and targeted at low- and middle-income consumers.

Foreign brands dominate the market, with 90 per cent of domestic cosmetic companies being their distributors.

Korean products have a 30 per cent market share followed by those from the EU (23 per cent), Japan (17 per cent) and Thailand (13 per cent). The US and other countries account for the rest.

But the Vietnamese market has huge potential, the conference said, quoting a report from Nielsen, which said its annual turnover is around VNĐ15 billion (US$700 million).

On average, each Vietnamese spends $4 on cosmetics each year. This is a low ratio in comparison with regional countries like Thailand where it is $20.

However, the spending is increasing  across VN.

To help domestic companies capture a larger share of the market, the association said it would organise overseas trips for them to study and learn from foreign companies’ experience. 

VNS