You are on page 1of 7

Cosmetics 2001

Beauty or Make Up Preparations,


Soap and Preparations for the Care of Skin

1. Industry Overview

The cosmetics industry is one of the fastest growing sectors not only in Thailand, but
the entire Asian region as well. The year 1997 saw the fastest growth period in the
cosmetic industry, with a growth rate of 20 percent. Although the economic crisis has
had a negative impact on consumption levels, results during 1999-2000 show the
cosmetics industry’s growth rate is at 15 percent with an average market value of
approximately 10,800 million Baht.

During the initial stages of industrial development, there were very few manufacturers
of cleansing and skin-care cosmetics. Most manufacturers were foreign companies
who established a production base in Thailand. The majority of cleansing, skin-care
products, and cosmetics that were distributed to the market were imported. The only
customers who had the means to afford these products were the upper-class who had a
high degree of purchasing power. The high price of imported products was a
weakness as they were too expensive for middle and lower class customers. However,
this lack of affordability presented an opportunity for investors to establish a
cosmetics production base in order to meet the desire of those less affluent customers.
In this way, the production of cleansing and skin-care cosmetics in Thailand has
expanded and developed continually.

2. Production

In 2000 current figures released by the Thai Cosmetic Association has shown that the
cosmetic industry in Thailand is composed of 300 factories. For the medium factory,
the capacity stands at 50 tons/day while for a small factory, the capacity is 10
tons/day. For the large manufacturers, mostly supported by foreign capital, their
capacity is between 100-200 tons/day.

The current situation regarding the production of cleansing and skin-care cosmetics is
as follows:
• Cleansing and skin-care products have traditionally come from two sources:
local production and imports from overseas
• Leading imported brand manufacturers were very interested in the
development of a production base in Thailand, with the objective of distributing
the products domestically as well as exporting to foreign countries
• The development of a production base in Thailand by brand leaders
encouraged Thai personnel to improve their knowledge and skill in production
and management
• The current main target market for imported products are upper-class
customers followed by middle-class customers who have increased their
purchasing power

CSN & Associates Page 1


Cosmetics 2001

• The current main target market for locally produced products with Thai brand
names are middle-class and lower-income customers

Industrial production of cleansing and skin-care products is closely monitored by The


Food and Drug Administration, Ministry of Public Health under the law of cosmetics
as outlined in the legislative act of 1992 (Thai year 2535). As for production quality
control, product quality and standard of products accepted by customers in the market,
all must be in accordance with the details of the legislative act of cosmetics which
manufacturers must abide by, as follows:

*0 Readiness and suitability of officers involved directly and indirectly with the
production of cosmetics
*1 Readiness and suitability of plant location, production equipment especially in the
case of specially controlled cosmetics production
*2 Quality of raw material used for production
• Quality of containers for products
• Clear explanation of label as prescribed by the Ministry

With the establishment of a production base in Thailand by brand leaders, a great


revolution of industrial production occurred in the field of cleansing and skin-care
cosmetics, and the number of new competitors increased for both importers and
manufacturers. This market expansion led to the continual development among
manufacturers who had their production base in Thailand. Some good quality
products were distributed locally while some manufacturers had the ability to develop
their products for export.

The five largest cosmetic and skin care manufacturers include:


1. International Laboratories Corp., Ltd.
2. U.B. Chemical Industry Ltd.
3. Rubia Industries Ltd.
4. Navasri Manufacturing Ltd.
5. Inchcape Manufacturing Co., Ltd.

CSN & Associates Page 2


Cosmetics 2001

3. Domestic Markets

The Thai domestic market was a principal market for manufacturers. All customers
were somewhat highly sensitive to price. The expansion of the market depended on
the overall economic situation, expanding when times were good, contracting when
the economy soured. In the highly competitive market, most manufacturers not only
tried to improve product quality and develop a variety of product types, but also
sought to use pricing as their principle tool for competition.

Domestic markets for cosmetics are divided into make up and skin care products with
a total market value of 9,000 million Baht. The total market value is expected to
increase by 10 percent per year. Consequently, entering this industry appears to be a
very attractive option for a number of new investors, both local and international
alike. For the most part, Thai manufacturers have focused more on natural products,
while international manufacturers have their own brand name. Sampling tests have
been used to spur demand in the market, especially to increase consumption among
teenagers and male consumers.

For cosmetic products, the majority of consumers are female (97 percent) who are
over 18 years of age. It is estimated that 15 million Thai people apply cosmetic
products regularly and spend 10-20 percent of their monthly income on cosmetics.

In 2000, the value of imports increased 31.4 percent or 2,158.7 million Baht. The
major importing markets include the United States, Japan, France, the United
Kingdom and China, accounting for 35.5 percent, 15.9 percent, 13.9 percent, 7.0
percent and 6.8 percent respectively of the total export market.

CSN & Associates Page 3


Cosmetics 2001

4. Export Markets

The total value of exports in


Beauty or Make Up Preparations, Soap and Preparations for the Care of Skin Export
Value (Million US$) by Destinations 2001 (Jan.-Aug.) this sector dipped slightly
following the Asian
economic crisis in 1997,
reaching a low of US $213.9
million in 1998. However,
OTHERS HONG KONG
25.33% 13.64% the total export value
INDONESIA
GERMANY 11.86% increased in 1999 to $277.9
3.29%
TAIWAN
million and climbed again in
PHILIPPINES
4.06% 10.99% 2000 to $344.6 million. This
KAMPUCHEA trend of steadily increasing
4.25% MALAYSIA
9.60% levels appears to be true for
U.S.A.
5.43%
SINGAPORE
5.64%
JAPAN
5.90%
the current year as well.
Figures show that total levels
are higher for the first half of
2001 than they were for the
first half of 2000 (US $267.3
Source: Department of Business Economics million versus $217.3
million).

Beauty or M ake Up Preparations, Soap and Preparations for the Care of Skin
Most of Thailand’s top ten
Exporting Status by Products 2001 (J an.-Aug.) export markets, especially
those in the Asia Pacific
Material used region have shown an
for cosmetic
products
increase in their level of
27.18% imports of beauty and skin
Cosmetic, care products from Thailand.
Perfumery For instance, Indonesia’s
and Soaps import levels have increased
72.82%
almost 200% from January to
August 2001 over the same
Source: Department of Business Economics
period last year.

The single largest export


market for Thai beauty and skin care products is Hong Kong, which makes up 13.6%
of the total export market. In the first half of 2001, Hong Kong imported US $36.5
million worth of beauty and skin care products from Thailand. Indonesia and the
Philippines represent the second and third largest export market for Thai products in
this sector, constituting 11.9% and 11% respectively of Thailand’s total export market
in this sector. From January to August 2001, Indonesia imported US $31.7 million
and the Philippines imported US $29.4 million worth of beauty and skin care products
from Thailand.

Considering the product type exported, 72.82% are exports of cosmetics, perfumery
and soaps, while 27.18% is material used for cosmetic products; preparations for the
care of skin, preparations for oral or dental hygiene, essential oils, soaps and
detergents, pre-shave preparations, bath preparation, organic surface-active agents,

CSN & Associates Page 4


Cosmetics 2001

mixtures of odoriferous substances, artificial waxes and prepared waxes, candles,


lubricating preparation and perfumes and toilet water.

Beauty or Make Up Preparations, Soap and Preparations for the Care of Skin
Export Value (Million US$) Classified by Countries 1997-2001 (Jan.-Aug.)

Export Value (Million US$) % Change


Countries 2000 2001 2001
1997 1998 1999 2000 1998 1999 2000
(Jan.-Aug.) (Jan.-Aug.) (Jan.-Aug.)
1. HONG KONG 36.25 46.31 53.63 50.47 31.76 36.46 27.76% 15.79% -5.89% 14.82%

2. INDONESIA 11.9 3.6 5.81 30.96 10.72 31.71 -69.75% 61.37% 432.94% 195.95%

3. PHILIPPINES 24.08 25.18 41.53 46.24 30.69 29.38 4.56% 64.98% 11.32% -4.28%

4. MALAYSIA 28.21 21.52 24.75 28.27 18.56 25.67 -23.74% 15.01% 14.22% 38.29%

5. JAPAN 15.16 13.44 14.41 21.28 14.38 15.77 -11.37% 7.26% 47.65% 9.71%

6. SINGAPORE 16.51 12.99 16.43 18.39 12.14 15.08 -21.33% 26.51% 11.90% 24.15%

7. U.S.A. 9.85 13.05 20.3 24.84 18.3 14.52 32.46% 55.59% 22.34% -20.65%

8. KAMPUCHEA 10.79 10.01 11.32 9.8 6.4 11.37 -7.20% 13.08% -13.46% 77.82%

9. TAIWAN 3.48 5 8.36 9.44 6.09 10.86 43.42% 67.35% 12.91% 78.28%

10. GERMANY 1.55 1.48 3.14 5.57 3.24 8.79 -4.16% 111.64% 77.57% 171.47%

Total 10 item 157.78 152.57 199.68 245.24 152.28 199.63 -3.30% 30.88% 22.82% 31.09%

Other 57.94 61.31 78.18 99.35 65.02 67.73 5.82% 27.51% 27.08% 4.17%

Grand Total 215.72 213.88 277.86 344.59 217.3 267.35 -0.85% 29.92% 24.01% 23.04%
Source: Department of Business Economics

Beauty or Make Up Preparations, Soap and Preparations for the Care of Skin
Export Value (Million US$) Classified by Countries 1997-2001 (Jan.-Aug.)

250
Total

200 HONG KONG

INDONESIA
150 P HILIP P INES

M ALA YSIA
100 J AP A N

Others
50

0
1997 1998 1999 2000 2000 (J an.-A ug.) 2001 (J an.-Aug.)

Year

CSN & Associates Page 5


Cosmetics 2001

Source: Department of Business Economics

CSN & Associates Page 6


Cosmetics 2001

5. Future Trends

The cosmetic industry is expected to continue to expand, thanks to a reduction in


import tariffs from 5 percent to 0 percent for raw material and finished goods of
cosmetics before the year 2005, according to AFTA agreement. Furthermore, Japan
recently lifted their import restrictions in line with World Trade Organization (WTO)
regulations, thus causing a number of Japanese manufacturers to relocate their
production base to Thailand, taking advantage of the lower cost of production.
Therefore, Thai manufacturers have the potential to produce more standardized
products (GMP: Good Manufacturing Practices). For instance, Kanebo of Japan has
partnered with Thai Sin Company (60/40) with more than 400 million Baht registered
capital to produce cosmetics to serve both local and international consumers.

It is expected that the cosmetics industry will enjoy a 20-25 percent growth rate over
the next few years. The economic slowdown in Japan in recent years may cause an
increase in the number of companies relocating their production base to Thailand.
Thailand is also a popular place for herb and aromatic products. EU countries also
perceive Thailand as a suitable location for cosmetic production due to low wages of
workers, especially compared to Singapore.

CSN & Associates Page 7

You might also like