Ministry of Health drafts decree to enhance cosmetics management

Out of 965 domestic production facilities, only 35 meet the standards set by ASEAN for good manufacturing practices in cosmetics.

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A customer tests cosmetics at a cosmetics store. (Photo

The goal is to streamline administrative procedures in the industry while also boosting the quality of locally-made cosmetics to compete more effectively with imported products.

Chu Quoc Thinh, head of the cosmetics management board at the Department of Drug Administration, Ministry of Health, said that currently, 70 percent of cosmetics available in Vietnam are imported.

Despite the industry's potential, local production still faces challenges such as small-scale operations and outdated technology.

Out of 965 domestic production facilities, only 35 meet the standards set by ASEAN for good manufacturing practices.

The rapid expansion of the cosmetics retail industry is posing growing challenges for regulatory oversight. Data from 2012 to 2022 indicates that the Drug Administration Department has intensified post-market monitoring efforts, examining 309 domestic and imported cosmetics manufacturers.

During this period, they had taken such actions as recalling more than 3,310 cosmetic products, suspending their circulation, and withdrawing 519 items deemed substandard.

The Ministry of Health's assessment indicates that foreign cosmetic companies, backed by robust communication strategies, dominate much of the market.

Vietnamese cosmetic enterprises currently only account for 30 percent of the declared cosmetic products, largely confined to the lower-priced segment.

Data from the Drug Administration Department and provincial Health Departments over eight years from 2015 to 2022 show that out of over 296,110 cosmetic product declaration certificates issued, 70 percent were for imported cosmetics.

Foreign investors are increasingly eyeing Vietnam for production ventures and expanding distribution networks. This influx is squeezing out local cosmetic brands.

The industry is also grappling with stringent environmental, safety and quality standards.

Thinh warned that amid the rise of new cosmetic brands, intense competition is making it tough for companies to retain customers. With an influx of products of dubious origin, especially via e-commerce platforms like Zalo and Facebook, consumers must be vigilant about choosing safe, quality products.

The surge in interest in natural and organic cosmetic products is propelling new trends.

Demand for cosmetics among Vietnamese consumers is on the rise, given the country's sizable population of nearly 100 million. Vietnam ranks 13th globally in terms of population, making it an attractive market for cosmetic manufacturers and distributors.

A survey by EuroMonitor International revealed that the Vietnamese cosmetics market is growing steadily at an average rate of 6 percent annually, reaching nearly US$2.7 billion in 2021 from $2 billion in 2016. Projections suggest total industry revenue could hit $3.5 billion by 2026.

According to Thinh, despite challenges, Vietnam holds promise for exporting cosmetics, including skincare, haircare, oral hygiene and personal care products, as well as luxury items like perfumes and makeup.

To bolster cosmetics market management, the Drug Administration Department is collaborating with relevant bodies under the Ministry of Health to draft a decree expected to be consulted and issued by 2025.

This decree is set to include three primary policy provisions.

Firstly, there is a focus on strengthening regulations regarding cosmetics product declaration to ensure alignment with international standards and the ASEAN Cosmetics Regulatory Scheme. This entails tightening pre-market assessments by closely overseeing documentation related to product features, functions, and overseas manufacturing.

Secondly, there's an emphasis on enhancing post-market surveillance to adapt to Fourth Industrial Revolution trends and leverage information technology in cosmetics management. This includes streamlining administrative processes to support businesses while safeguarding consumer rights. Measures include establishing a national cosmetics management database, simplifying administrative procedures through e-government services, and empowering cosmetics regulatory agencies with enhanced legal enforcement authority.

Thirdly, efforts are directed towards improving the quality of domestically produced cosmetics by implementing ASEAN Cosmetic Good Manufacturing Practice (CGMP) standards. This involves bolstering quality management, tracing product origins, adjusting business practices, recalling online products, and introducing cosmetic identification codes.

Forcasts indicate that Vietnam's cosmetics market will sustain rapid growth in 2024 and beyond.

However, to flourish, businesses must prioritise aspects like product quality, sustainability, technological advancements, and online customer engagement, experts said. Furthermore, maintaining competitiveness and adaptability to evolving consumer needs are most important.

For emerging brands eyeing market entry, establishing trust and credibility among customers is essential. This can be achieved by leveraging natural ingredients and safe components that ensure user health. Equally crucial is providing accurate information about product attributes and benefits to entice potential buyers.

At present, there's a noticeable shift in market preferences towards organic and naturally sourced cosmetics. Consequently, brands must innovate and refine their offerings to align with this evolving consumer demand.

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