The cosmetics sector in Vietnam is still developing. Presently, the sale of cosmetics and beauty products is largely uncontrolled and is plagued by a wide range of fake, mislabeled, and smuggled products. The Vietnamese cosmetics market is highly price sensitive and full of lowcost “knock-offs”. International cosmetic giants must contend with these challenges when entering the market with their premium products. Vietnamese consumers typically spend about VND 45,000 (about US$3) per year for cosmetics purchase at local street shops. Similar beauty products sold at department stores, supermarkets, and specialty cosmetics shops cost roughly twice as much.
Vietnamese consumers spent US$82 million on beauty and skin care products in 2006. Illegal and unofficial imports are estimated to account for as much as 60 percent of these sales in Vietnam. Currently, Vietnamese women spend US$3 – 4 per capita on cosmetics and beauty products per year. By contrast, other Asian countries spend the following amount per capita: Taiwan (US$41.7), Korea (US$40.9), Hong Kong (US$35.7), Thailand (US$19.5) and China (US$10).
Consumer tastes and preferences for more sophisticated products are maturing and shifting towards quality brand names. This is especially so with younger consumers. Foreign companies already in Vietnam recognize the market’s future potential and are advertising aggressively. To capture more market share, local manufacturers are investing in more research and development, as well as marketing and distribution activities to compete with superior international brands. This growing and rapidly developing market offers numerous opportunities for American companies in the following segments: finished beauty products, raw cosmetics material and manufacturing technologies and related equipment for beauty products.