Korean beauty franchise is about to 'land' in Vietnam

After seven tax lines on cosmetics were removed, many Korean beauty care brands are finding their way into Vietnam through the franchise model.

“Vietnam is currently the most potential market for companies operating in the Korean beauty care industry. Perhaps due to the increasing average income or job requirements, the proportion of Vietnamese women and urban youth who need professional beauty treatments is increasing rapidly. According to unofficial statistics, this figure is estimated to be around 30%,” said Mr. Cho Yun Oh, representative of the skin care and beauty salon brand Beaupeople.

According to Mr. Cho, Vietnam does not have many foreign franchise brands in the beauty industry, so this is a fertile market and is expected to become a leading business trend in the next 10 years. Currently, the company is also actively looking for partners to develop a franchise model for skin care salons and beauty academies.

However, the biggest challenge of this market is the constantly changing consumer trends due to the rapid integration process, leading to fierce competition and elimination. To ensure the highest chance of success, most Korean enterprises build a solid foundation in neighboring markets such as Thailand, Singapore, etc. before considering "landing" here.

Korean beauty care companies are actively looking for franchise partners in Vietnam.

A representative of Leekaja HairBis, a hair care brand with the largest number of stores in Korea, recently confirmed that Vietnam could be the next destination in its global franchise plan. “Most Korean trends are loved by young Vietnamese people, typically music and cuisine. This is one of the things that makes us more confident in our plan to conquer this market,” he said.

Sharing about the plans in the Vietnamese market, the representative of Leekaja HairBis said that in addition to imported hair care services and accessories, this brand will also focus on researching its own beauty product lines to suit the tropical climate. This person also revealed that there will be a strategy to attract male customers, a group that is rarely interested in beauty care brands.

“Our principle when franchising in any country is to focus on training human resources to take over and operate beauty care centers. This is done through beauty academies with a curriculum that combines Leekaja's secrets and the consumer psychology of local customers. We are somewhat worried about doing this in the Vietnamese market,” said the brand representative.

Mr. Yoon Joo Young, Director of the Korean Trade Office in Ho Chi Minh City, commented that the Korean franchise model has been quite successful in recent years, especially in the culinary and beauty sectors. This market has favorable conditions on many sides, from Vietnamese consumption trends to cooperation policies through the Vietnam-Korea Free Trade Agreement (VKFTA).

According to Mr. Yooon, the fact that more and more beauty care brands are targeting the Vietnamese market is a positive sign, recognizing the initial successes of VKFTA when Vietnam committed to eliminating 265 tax lines for Korea, including 7 tax lines applied to cosmetics. “We expect that Korean businesses coming here will also increase competitiveness, creating motivation for domestic franchise brands to develop,” Mr. Yoon said.

According to statistics from the Ministry of Industry and Trade, up to now there are about 163 franchise brands in the Vietnamese market, achieving a growth rate of about 15-25% per year. Of these, there are 11 Korean enterprises but mainly operating in the culinary field.

Regarding cosmetics, data from the Trade Map of the International Trade Center (ITC) and the World Bank (WB) shows that from less than 500 million USD in 2011, the value of cosmetics imported into the Vietnamese market increased to more than 1.1 billion USD in 2016. This figure is forecast to continue to double, to about 2.2 billion USD in 2020.

These figures are also reinforced when a market research report by Euromonitor International also said that the size of the Vietnamese cosmetics market, with 90% of imported goods, exceeded the 1 billion USD mark 2 years ago with annual growth regularly reaching double digits.

The proportion of this item in the total consumer budget is also estimated by experts to increase to 1.2% after 3 years, compared to 0.4% in 2011.

According to VNE