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Cosmobeaute Vietnam News

  • • Economy expanded 6.21% in 2016, among the fastest in the world
  • • Disbursed FDI climbed 9% to a record $15.8 billion this year

Vietnam’s economy expanded more than 6 percent for a second year, defying a regional slowdown to remain one of the world’s best performers as manufacturing surged.

Key Points

  • • Gross domestic product increased 6.68 percent in the fourth quarter from a year earlier, up from 6.56 percent in the previous three months, the General Statistics Office said in Hanoi Wednesday
  • • The economy grew 6.21 percent in 2016, compared with the median estimate of 6.3 percent in a Bloomberg survey

Big Picture

Vietnam ranks among the world’s fastest-growing economies as its exports remained resilient to a global trade slowdown that’s hurting Singapore and China. Companies setting up plants in the country, such as Samsung Electronics Co., are transforming the nation into a manufacturing hub for electronics goods, including smartphones. The Asian Development Bank forecast Vietnam’s economic growth at 6.3 percent in 2017.

Economist Takeaway

"Vietnam is in a sweet spot right now," said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. "Strong growth will persist in the next several years. It is continuing to gain market share in exports and even giving China a run for competitiveness. Foreign companies continue to invest in Vietnam to take advantage of its highly competitive labor and low cost. The outlook is bright and it is one of the standout economies in Asia."

Market Reaction

Benchmark five-year government bonds dropped for the first time in a week, losing four basis points to 5.64 percent. The benchmark VN Index fell as much as 0.3 percent before closing 0.1 lower in Ho Chi Minh City trading

Other Details

  • • Manufacturing gained 13.61 percent in the fourth quarter from a year earlier, fastest pace this year, Ha Quang Tuyen, head of GDP department at the GSO, said at a briefing on Wednesday
  • • Exports rose 8.6 percent in 2016, imports gained 4.6 percent, according to GSO
  • • Vietnam posted a trade deficit of $300 million in December. It had a trade surplus of $2.68 billion for 2016
  • • Retail sales rose 10.2 percent in 2016
  • • Disbursed foreign direct investment climbed 9 percent to a record $15.8 billion this year. Pledged FDI increased 7.1 percent

Source: Bloomberg Market

https://www.bloomberg.com/news/articles/2016-12-28/vietnam-s-gdp-growth-quickens-to-6-68-in-4th-quarter

Young population and increasing middle class have made Vietnam one of the most attractive emerging retail markets.

According to a recent report by global real estate service firm JLL Vietnam, investors from Japan, Thailand, France and South Korea have flocked to find opportunities in Vietnam. Thai firm, Berli Jucker Plc bought Metro Cash and Carry Vietnam for EUR655m, making it the biggest merger and acquisition transaction in 2014. Not long later, another big player from Thailand, Central Group also acquired Nguyen Kim electronics chain and then the Big C Supermarket.

In 2015, South Korea's top retailer Emart discount store chain was opened in Ho Chi Minh City. Meanwhile, another supermarket brand from South Korea, Lotte, has successfully opened 11 supermarkets and aims to increase the number to 60 by 2020.

After two years joining the retail market, Japan's Aeon Mall now owns four shopping malls, nearly 50 shops and said it expected to open 20 shopping centres in Vietnam by 2020. France's AuchanSuper also decided to expand the business by opening 17 supermarkets in Ho Chi Minh City and 20 shops in the northern region by 2020 after the success of its three Simply Mart stores and assessing the potential growth of local retail market.

As incomes per capita increases, locals now can afford to spend more, and Gap, Mango and Topshop are becoming more familiar with young people. In early September, Zara opened its first flagship store in Ho Chi Minh City and H&M is said to be completing procedures to enter Vietnam early next year.

The report pointed out that Vietnam's retail market has lots of room for growth with people aged 15-64 accounting for 70% of its 90 million population. From 2015 to 2020, its urban population is predicted to growth by 2.6%, one of the highest growth rates in the region.

Trang Bui from JLL Vietnam said, "Vietnam is the most dynamic emerging economy in South East Asia thanks to its increasing disposable incomes, rapid urbanisation and rising living standards."

American consulting firm Boston Consulting Group also assessed that the middle and upper classes will double in size by 2020. People with monthly incomes of over USD714 are the main target of retailers. In addition, credit cards have become familiar with the public and consumers are less worried about spending more. Increasing international tourists and better infrastructure are also important factors to attract investors.

"The competition has become increasingly fierce and only retailers with right strategies to meet market demand will gain greater market share," JLL wrote in its report.

 

Source: Vietnam Net Bridge

http://english.vietnamnet.vn/fms/business/164324/retail-market-attracts-foreign-investors.html

Exhibitors from different countries exhibit in Cosmobeauté Vietnam.

With tax reductions for beauty industry products included in free trade agreements (FTAs), Vietnam is seen as a promising market for cosmetics firms and foreign suppliers of beauty-care machines and equipment.

According to Dao Thu Huong from the Ministry of Finance, under the Vietnam-Republic of Korea FTA, Vietnam committed to cut tariffs on 200 products imported from the Republic of Korea (RoK), including cosmetics.

This would pave the way for RoK cosmetics to flock to Vietnam in the time to come. In early 2010, the RoK could only export seven product lines to Vietnam. However, even with the restriction, the cosmetics import turnover from the market was high at US$12.7 million. During that time, preliminary statistics showed that with the high growth rate of 10-20% per annum and nearly no rival, foreign cosmetics companies dominated the market worth US$150 million a year.

Beauty salon chains have been thriving in Vietnam. Guardian, a brand of Dairy Farm Group, has 39 shops after five years of presence in Vietnam. Orient Beauty Corp, which has distributed SkinFood’s products in Vietnam since 2011, now has 20 shops. Body Shop has developed 20 shops in Hanoi and HCM City since 2009.

Analysts predicted that from 2017-2018, when the import tariff is cut to 20%, RoK cosmetics would be even more commonly used in Vietnamese beauty industry. Not only products from the RoK, but cosmetics from Japan, Thailand and Malaysia would also have opportunities to conquer the Vietnamese market as Vietnam has also signed FTAs with many other countries.

This explains why the number of cosmetic firms attending Cosmobeauté, a well-known exhibition event, has been increasing steadily over the last nine years.

CP Saw, president of Cosmobeauté, said many businesses came to the exhibition to look for clients because they saw great potential in the Vietnamese market.

According to Nielsen, the demand for beauty products in Vietnam was still modest in 2014 with each Vietnamese spending US$4 a year on cosmetics, 1/5 of that in Thailand (US$20 per head per annum).

Commenting about the market scale, a representative of Phuong Mai JSC, which distributes water filters made by Mitsubishi Rayon Cleansui priced at VND50 million and higher, said not only spas and beauty salons, but consumers also order products, which shows an improved awareness of Vietnamese about health care.

However, though the domestic market is large, it is not the place for investors to set up factories. Nguyen Thanh Thao, deputy chair of the HCMC Cosmetics Association said that some foreign invested enterprises have stopped production in Vietnam and left for Malaysia and Thailand.

 

Source: Vietnam Business News

http://wji.at/Vietnam-News/vietnamese-beauty-industry-is-lucrative-market/

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