Vietnam is seeing exponential growth in demands for South Korean cosmetics, marking it as a potential replacement market for Korean beauty companies suffering from their recently spluttering performances in the major market of China, according to data Monday.
According to the Korea Cosmetics Association's data, Korean cosmetics exports to Vietnam from January to May this year surged 43.4 percent compared to the same period a year earlier, logging $187.5 million in exports.
Korea's cosmetics exports to Vietnam marked the highest growth rate.
With exports of $425.12 million, Korean cosmetics exports to the United States grew by the second-highest (25.7 percent), while exports to Hong Kong, logging $23.8 million, grew by 16.7 percent.
Meanwhile, China, Korea's biggest cosmetics exports destination at $1.2 billion, saw a 25.7 percent drop. Korea's cosmetics exports to Japan also saw a 5.3 percent decrease to $323.9 million.
Additional data showed that K-beauty's performance in Vietnam has been gaining traction.
Data from the US Department of Commerce showed that South Korea had the largest market share in Vietnam's imported cosmetics market (30 percent), followed by the European Union (23 percent), Japan (17 percent), Thailand (13 percent) and the US (10 percent).
Currently, 90 percent of all cosmetics consumed in the Vietnamese beauty market are from foreign brands.
According to a survey conducted by the Korea International Cultural Exchange Agency on respondents aged 15 to 59 in Vietnam, 91.2 percent answered they have purchased at least one Korean cosmetics product over the past year. Some 68.8 percent answered they buy Korean beauty products frequently.
The growth in Korean beauty products in the Vietnamese market points to the possibility that the country could potentially function as an alternative market for Korean beauty companies, whose performance in China has been stalling recently.
Korean firms topped beauty sales in China in 2017 and 2018.
However, over the past few years, following the increase in Chinese commodities' overall quality and lingering political tensions between China and Korea over the Korean government’s decision to install a US-made missile defense system, a nationwide movement spread in China to curb the purchase of Korean products and to buy domestically produced beauty products.
With Korean beauty giants such as Amorepacific seeing their Chinese sales -- which account for some 50 percent of their global sales -- tumble by 35 percent last year, Korean beauty companies have since been pivoting to countries other than China to salvage their sales.
However, industry watchers say conducting business in Vietnam to make up for sales lost due to deteriorating Chinese business could be difficult, considering the sheer purchasing power of Chinese consumers.
"But, riding along the expanding popularity of K-content and the spread of social media, Vietnam's beauty market is rapidly expanding, and long-term investments in Vietnam for Korean beauty companies are viewed as promising," said an industry source close to the matter.
According to Statista, a German data analysis platform, Vietnam's beauty market is estimated to expand to $2.7 billion next year.
