Efforts to supply US $ one billion of raw materials and cosmetics to replace imported goods

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Dr. Nguyen Van Minh

Could you please share about the current status of the aroma, essential oil and cosmetics industry in Vietnam?

Vietnam has a very rich and abundant source of plant materials containing essential oils, with high essential oil content and good quality essential oils, with many valuable biological activities. These raw materials have the ability to be produced into medicinal herbs, functional foods, and cosmetics. However, this precious raw material source has not been focused on exploiting effectively, the raw material areas have not received investment attention, so they are only on a small scale, with unstable quality and output, making the development difficult and limited.

Meanwhile, with more than 100 million people, ranking 15th in the world in terms of population, Vietnam is currently a potential and attractive market for cosmetics manufacturers and distributors... Especially when the economy development is stable, people's lives are increasingly improving, and the demand for cosmetics in Vietnam is constantly increasing. However, the domestic cosmetics market is being dominated by foreign brands.

Has Vietnam wasted precious resources from cosmetic raw materials in recent times?

In recent years, Vietnam has exported cosmetic ingredients to a number of countries in Southeast Asia, Africa and South America, but the turnover only reached about US $ 500-800 million/year.

Regarding the domestic cosmetics manufacturing industry, Vietnam currently has hundreds of cosmetics manufacturing enterprises, but most of them are small-scale and do not have strong brands. There are only fourteen enterprises that are quite large in scale but only in the low price segment and exported to a number of markets. Many input materials of these enterprises must also be imported from countries such as France, Spain, India..., due to low domestic supply and unstable quality. Therefore, VOCA is making efforts and hopes that in the future, Vietnam can replace about US $ one billion of imported raw materials and cosmetics, helping to reduce the trade deficit in this industry.

Specifically, what solutions will VOCA deploy to realize this goal, sir?

In fact, Vietnam has many rare cosmetic ingredients that other countries do not have, such as agarwood, dong quai, sassafras... Therefore, Vietnam is chosen as a priority supply source for many manufacturing companies cosmetics in the world. Therefore, there needs to be investment in raw material areas to keep up with world requirements for organic products and beauty products of natural origin.

In 2023, when attending the "Guangzhou - China International Cosmetic Week", VOCA gave a presentation about Vietnam's advantages in providing raw materials (essential oils, medicinal herbs: leaves, flowers, roots, stems, tubers, seeds), which are very rich and diverse thanks to the climate and soil conditions throughout the length of the country; as well as the increased demand for beauty cosmetics, not only for women but also for men and the elderly.

This information has attracted great attention from many cosmetic manufacturing businesses. Accordingly, on May 8 and 9, VOCA will organize the forum "Connecting China and ASEAN beauty industry trade" in Ho Chi Minh City. The forum attracted about 250 cosmetics businesses in Guangdong, China with about 150 Vietnamese essential oil and cosmetics businesses registered to attend.

After a long period of outsourcing for brands around the world, Chinese cosmetics businesses are ready to move to the branding and export stage. The first destination in the "going offshore" strategy of Chinese cosmetics is ASEAN and Vietnam is the gateway to enter this market.

This is a great opportunity for Vietnamese businesses to take advantage of the resources of Chinese businesses. Because at the upcoming forum, in addition to looking for factories to process and package distribution orders to the Vietnamese and Southeast Asian markets, Chinese businesses are also looking for alternative raw material sources, especially are natural raw material sources such as coconut oil, moringa seed oil, lemongrass essential oil, peppermint essential oil... for serving the production and export of cosmetics.

VOCA hopes this event will bring opportunities for cooperation as well as opportunities to learn from experience for Vietnamese businesses in developing and better exploiting domestic cosmetic raw materials. This will help the domestic aroma, essential oil and cosmetics industry develop better in the future.

Thank you!