The Vietnamese cosmetics market is the most dynamic in the region, despite its young age. As the standard of living in Vietnam rises, Vietnamese consumers have an increasing need for personal care and beauty products besides their basic needs.

Furthermore, up to 93 percent of Vietnam’s personal care products are imported from abroad with South Korea as the top place of origin, followed by the United States, Europe, Japan, and Thailand. Vietnamese people have a strong belief that foreign brands have better quality and a wider range of products to meet all of their needs, so foreign products make up most of the market.

 There was an emergence of retail chains that retail cosmetics in Vietnam in the last few years, such as Hasaki, Guardian, Watsons and Innisfree, Pharmacity and Masumoto, and soon-to-be Sephora.

In recent years, thousands of trading companies that import/distribute cosmetics have been founded in Vietnam in response to this market’s potential. If you are among those who are interested in opening a business of this kind, this article will explain all the stages and procedures you need to know.

WHAT ARE THE STEPS TO IMPORT AND DISTRIBUTE COSMETICS IN VIETNAM?

To import and distribute cosmetics in Vietnam, three stages must be completed:

1. Step 1: Establish a Trading Company in Vietnam
2. Step 2: Import cosmetic products into Vietnam
3. Step 3: Distribute imported cosmetics to the market

Detailed information about each stage is provided below:

Step 1: Establishing a 100% foreign-owned trading company in Vietnam

In Vietnam, to import and distribute cosmetics you will start by registering a company with a trading function. This trading company grants you the right to do the importation and wholesale of the products. A wholesale business model means you will sell products to other businesses (B2B).  Below are the standard requirements for registering a company of this kind:

• Business address: You need an address for the company, you actually can use either a virtual address or a physical address during the setup phase.
• Resident Director: Any business entity in Vietnam requires a person, holding resident status, to hold the Legal Representative position. If you are not in Vietnam, or not having anyone in Vietnam for this assignment, you can consider using a nominee resident director service at this step. 
• The Capital: Determine the capital investment of your business, this capital will be injected into your company after it is fully incorporated. There is a minimum requirement for capital by the law, but a reasonable number is recommended.

Six stages you need to go through to make your trading company fully incorporated:

1. Obtain the Investment Registration Certificate (IRC)
2. Obtain the Business Registration Certificate (BRC) or ERC
3. Make the company’s seal/stamp
4. Open the company’s bank account
5. Inject the committed capital into the company’s bank account
6. Register Tax account and E-invoice account

The whole process takes 4-6 weeks or 30-45 days to complete.

Learn more details about opening a Trading company in Vietnam – with 100% foreign ownership

Step 2 – How to import cosmetics into Vietnam?

After the company is fully incorporated, it can start to import the product into Vietnam. This procedure would follow the below steps:

• Determine the HS code of the commodity

Defining the exact HS code is the first thing you need to do before anything else begins. The HS code helps to define the importation tax and to fill the Custom Clearance form properly.

In Vietnam’s List of Import and Export Goods, the majority of cosmetic products are classified under group HS code 3304 “Beauty or make-up preparations and preparations for the care of the skin (other than medicaments), including sunscreen or sun tan preparations; manicure or pedicure preparations” and some cleaning products are classified under group HS 3401.

• Obtain the Notification of Cosmetic Product

To import cosmetics into Vietnam, each product must have a Notification of Cosmetic Product with a Cosmetics Product Notification Number that is valid for five years from the day it was announced by the Drug Administration of Vietnam under the Ministry of Health. Prior to this Notification process, the product needs to take a Lab Testing to check the ingredients and make sure it complies with Vietnam’s regulations of Cosmetics.

For instance, if you wish to import three distinct cosmetic products, you must submit dossiers for three distinct Cosmetics Product Notification Numbers.

In theory, the processing of the Notification of Cosmetic Product takes 7 working days. However, in reality, this process can take roughly 1 month or more due to the overloaded Government body unable to handle the applications on time. The dossiers, if not provide sufficient information will take a few weeks extra for this process as well. 

• Customs procedure of import Cosmetics into Vietnam

Once the Product Notification is completed. You now can start the importation step. This process involves a Custom Clearance procedure for every shipment that arrives. Besides the standard documents for Custom Clearance such as the Invoice, Packing List, COO, Airways bill, Bill of Lading, etc, the Customs Office will ask for the documents relating to Testing, Product Notification as we obtained in Step 2. 

With all sufficient documents provided, the customs clearance will be processed within two business days. For some special occasions, sometimes it happens randomly, the shipment will go into “Red Line” which means it will be opened and checked directly by the Customs. If this happens, it will delay the clearance process for a few days.

Step 3 – How to do cosmetics distribution in Vietnam?

As stated previously, a trading company has the wholesale function by default; therefore, once a trading company is established, it can instantly engage in import/export and wholesale operations (B2B model).

However, if you also wish to sell your cosmetic products directly to the end consumers, your business must obtain the Retail License issued by the Department of Industry and Trade.

The dossier must include a business plan that describes your company’s operations and plans for the future. In addition, a financial strategy detailing how the capital will be utilized and the liquidity statements of the business must be prepared. After successfully establishing the business, you can submit the application for the Retail License immediately. To apply for this license, you must provide an audited financial statement and a no-pending-tax-obligation confirmation from the Tax Department if your company is from 1 year old in Vietnam.

In theory, it will take approximately 10 business days to process the dossier. However, the actual processing time may be extended to 1-3 months as the Government officers have the tendency to require clarification, and additional documents along the way, resulting in a few weeks extra for the process.  

HOW CAN VNBG SUPPORT YOU?

In general, it is simple to establish an import and distribution cosmetics business in Vietnam. The law requires minimal conditions for company establishment. Except for retail companies, which must obtain a Retail License, no other sectors have additional requirements or sub-licenses. Obtaining the necessary documents for importing and distributing cosmetics is, however, the greatest challenge.

At VNBG, we are proud of our many years of experience assisting in establishing hundreds of trading companies and filing thousands of dossiers to obtain import permits for their products. Therefore, we are confident in our ability to expedite the procedure and save you both time and money.

We are delighted to provide you with the most effective and cost-efficient business solutions in Vietnam. If you have any questions, feel free to contact us at any time, and our legal specialists will answer you within 24 hours.

You may also be interested in the following:

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10 STEPS TO GET YOUR COMPANY FULLY OPENED AND READY TO RUN IN VIETNAM

SET UP A BUSINESS AT THE LOWEST POSSIBLE COST IN VIETNAM

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