Challenges for Vietnamese cosmetics companies in future
There are two obvious trends in foreign direct investment cosmetics companies entering the Vietnamese market. First, they enter the market through direct investment, Korean company DeBON Cosmetics is a typical example. Since 1997, Depont has gradually occupied the Vietnamese market share by building a factory in Vietnam. The growth rate of the company sometimes reaches 30% / year.
Challenges for Vietnamese cosmetics companies in future
Korean company DeBON Cosmetics
DeBON Cosmetics is a South Korean beauty company that specializes in developing and manufacturing high-quality skincare products. The company was founded in 2005 and is headquartered in Seoul, South Korea.
Read more Domestic Natural and Organic Cosmetics are gaining popularity in Vietnam
DeBON Cosmetics’ product line includes a wide range of skincare products, including cleansers, toners, serums, moisturizers, masks, and sunscreens. The company is known for using natural ingredients, such as plant extracts and herbal essences, in its products to provide gentle yet effective skincare solutions.
DeBON Cosmetics places a strong emphasis on research and development, with a team of experts dedicated to developing new and innovative skincare formulas. The company also invests heavily in advanced technology and production processes to ensure the highest level of quality and safety for its products.
One of DeBON Cosmetics’ signature products is its Gold Collagen Ampoule, a highly concentrated serum that contains gold nanoparticles and collagen to help reduce the appearance of fine lines and wrinkles, improve skin elasticity, and provide deep hydration.
The company also offers a range of skincare products specifically designed for men, as well as a line of anti-aging products for mature skin.
DeBON Cosmetics exports its products to more than 20 countries worldwide, including the United States, Canada, China, Japan, and the United Kingdom. The company has won several awards for its products, including the Korea Brand Award and the Korean Consumer Satisfaction Index (KCSI) award.
In summary, DeBON Cosmetics is a South Korean beauty company that specializes in developing and manufacturing high-quality skincare products. The company uses natural ingredients and advanced technology to create innovative skincare formulas, and its products are known for their effectiveness and quality. DeBON Cosmetics exports its products to over 20 countries worldwide and has won several awards for its products.
If the import tax is reduced to 0% in the next few years, there is a high probability that it will lead to major changes in the cosmetics market, especially when the transaction rate is still very attractive.
The second way is to sell cosmetics directly through franchising. Shiseido is the most typical example. This is a well-known Japanese cosmetic brand introduced and distributed in Vietnam in 1997 by Thuy Loc Company. The brand has won the Vietnamese market through retail chains opened in several cities across the country, mainly in Hanoi and Ho Chi Minh City. Afterwards, many small investors in Vietnam participated in the expansion of the retail network led by Thuy Loc.
Due to the preferential policies in recent years, many foreign direct investment cosmetic companies find it easier to invest in production and enter the Vietnamese market. However, since 2015, Vietnam has signed and complied with a series of agreements such as the ASEAN Trade in Goods Agreement (ATIGA), the ASEAN-China Free Trade Area (ACFTA), the ASEAN-Korea Free Trade Area (AKFTA), and the ASEAN-India Free Trade Area. Trade Area (AIFTA), Vietnam-Japan Economic Partnership Agreement (VJEPA), the import tax rate of almost all products will be reduced to 0-5%. Investment incentives for cosmetics will no longer be attractive due to high investment costs.
“If the cosmetics import tax is reduced to 0%, some cosmetics companies will stop producing in Vietnam and focus on import and distribution. Two-thirds of foreign direct investment companies investing in cosmetics have stopped producing in Vietnam.”
Challenges for Vietnamese cosmetics companies in future
Trade Area (AIFTA)
The ASEAN-India Free Trade Area (AIFTA) is a free trade agreement between the ten member states of the Association of Southeast Asian Nations (ASEAN) and India. It was signed in 2009 and came into effect on January 1, 2010.
The AIFTA aims to promote trade and investment between ASEAN member states and India by reducing or eliminating tariffs on goods and services traded between the two regions. The agreement covers a wide range of sectors, including agriculture, manufacturing, and services.
Under the AIFTA, ASEAN member states and India have agreed to gradually reduce or eliminate tariffs on goods traded between the two regions. This will help to lower the cost of imports and exports, making it easier for businesses in both regions to trade with each other.
The agreement also includes provisions for the protection of intellectual property rights, the elimination of non-tariff barriers to trade, and the promotion of investment flows between ASEAN member states and India.
The AIFTA is expected to benefit both ASEAN member states and India by providing greater market access for their respective products and services. It is also expected to promote regional integration and strengthen economic ties between the two regions.
Since the implementation of the AIFTA, trade between ASEAN member states and India has increased significantly. The agreement has helped to create new opportunities for businesses and has contributed to the economic growth and development of both regions.
In summary, the ASEAN-India Free Trade Area (AIFTA) is a free trade agreement between ASEAN member states and India that aims to promote trade and investment between the two regions. The agreement reduces or eliminates tariffs on goods and services traded between the two regions and includes provisions for the protection of intellectual property rights and the promotion of investment flows. The AIFTA is expected to benefit both ASEAN member states and India by providing greater market access for their respective products and services.
