“Vietnam is the market with the most potential for South Korean beauty care service companies,” said Cho Yun Oh from Beaupeople skincare & spa chain.
The number of urban women and youth who have demand for beauty care services with professional therapies has been increasing rapidly, about 30 percent per annum, according to Cho.
Meanwhile, there are very few foreign franchise brands in the field in Vietnam. Cho and other businesses believe that Vietnam will be a lucrative market in the next 10 years.
Many South Korean beauty service brands are seeking ways to penetrate the Vietnamese market through franchise models after the elimination of seven tariff lines on cosmetics.
Beaupeople is looking for partners to expand the franchise model for skincare salon and a cosmetology academy.
However, the market is challenging because the consumption tendency changes regularly as a result of rapid integration, which will lead to stiff competition and the elimination of less competitive brands.
An analyst commented that in order to ensure success in Vietnam, most South Korean businesses have first built firm foundations in neighboring markets such as Thailand and Singapore.
A representative of Leekaja HairBis, a hair care brand, has confirmed that Vietnam may be the next destination in its plan to expand the franchise network.
“Most trends in South Korea have been favored by Vietnamese, including music and food. This is one of the reasons that make us feel more confident,” he said.
When asked about the business plan in Vietnam, the representative said besides hair care services, it would develop specific product lines for tropical markets and would try to attract male customers, which other brands do not intend to do.
Yoon Joo Young from KOTRA said South Korean brands have been succeeding with franchise model in recent years, especially in food and beauty care services. There are many favorable conditions in the market, including the consumption tendency in Vietnam and the Vietnam-Korea FTA (VKFTA).
Under VKFTA, Vietnam committed to eliminate 265 tariff lines on imports from South Korea, including 7 tariff lines on cosmetics.
According to the Ministry of Industry and Trade (MOIT), 163 brands have been franchised to Vietnam with the growth rate of 15-25 percent per annum. These include 11 brands franchised from South Korea, mostly in the food sector.
Vietnamese tend to spend more money on cosmetics and beauty services. A report of ITC’s Trade Map and the World Bank showed that Vietnam imported $1.1 billion worth of cosmetics in 2016.