Vietnam Abruptly Cancels Permits for 32 Imported Cosmetics, Including Korean K-Beauty – Shock
The Vietnamese government has abruptly canceled import permits for 32 cosmetic items from four countries, including South Korea. This action is perceived as a warning against intensified market competition and regulatory risks, beyond mere administrative procedures.
Recently, Vietnam’s Drug Administration under the Ministry of Health officially revoked permits for 32 imported cosmetic items. These products were sourced from four countries including South Korea, Japan, France, and Poland, initiated by the importers themselves citing business viability decline as a reason for voluntarily returning permits. The cancellations immediately led to halting their sales, with instructions to confiscate and dispose of all such items found in the market.
The cancellations included 13 products distributed by NMC Global from Poland, 9 items handled by HS-ONE from Japan and South Korea, 7 products imported by Bipaco Pharmaceuticals from France, and products distributed by Global G2 from South Korea. A Vietnamese official provided the following explanation:
“These companies voluntarily declared their intent to relinquish business rights due to strategic changes or decreased demand.”
- Drug Administration official
This is interpreted as part of a broader adjustment in management structures due to declining profitability in the local market, rather than a problem with specific product lines.
Increased Competition in Vietnam’s Cosmetic Market
The mass withdrawal of 32 cosmetic items from the market starkly highlights the fierce competition within Vietnam’s cosmetics sector. The inclusion of Korean products has particularly shocked the industry.
Vietnam has increasingly applied stricter standards to foreign brands due to rapidly shifting consumer trends, intensified regulations, and the inundation of similar products. Besides ordering a ban on products with revoked import permits, Vietnam’s Ministry of Health has instructed regional health departments to conduct thorough field inspections.
“Products with revoked import permits are considered to have ceased official quality control.”
- Hanoi Health Department official
This implies that continued distribution could lead to legal penalties without leniency.
Market Management Policy and Reasons for Korean Companies’ Withdrawal
The permit revocation is attributed not only to declining profitability but also to Vietnam’s strengthened market management policies. Vietnam is launching extensive regulatory reforms, targeting counterfeit goods across pharmaceuticals, food, and cosmetics.
In light of this, Korean beauty products, which had been thriving, now face new challenges. The K-Beauty products withdrawing despite having no defects must now contend with potential declines in brand credibility and distribution losses.
HS-ONE and Global G2’s withdrawal of 12 Korean products, previously stable in local distribution networks, raises suspicions about the underlying reasons. The interpretation that low profitability due to high prices relative to competitive products mainly persists.
Growth and Structural Limitations of Korean Cosmetic Exports
According to the Korea International Trade Association, Korea’s cosmetic exports to Vietnam increased by 122% from 2019 to 2023, recording high growth surpassing an average of 22%. Vietnam is a major export destination for Korean cosmetics, capturing almost 30% of the overall import market share.
However, despite such growth, there has been a lack of preparation for sudden external factors like permit cancellations. This event reveals that solely relying on exports is insufficient, and that fortified control over the entire import and distribution structure is necessary for stable growth.
Some companies had not engaged in direct imports through local entities but relied on small-scale distribution partners to whom permit rights were entrusted. Consequently, they lacked the structure to swiftly respond when regulations heightened.
Local Distributors’ Complaints and Limited Response Capacity
According to interviews conducted by KOTRA’s Trade Center in Da Nang, local buyers are already experiencing significant inconvenience due to complex administrative procedures and permit delays.
“Permit delays and administrative issues are moving beyond simple inconvenience to result in losses from missed import timing. This situation may prolong.”
- Missi Import Export JSC Representative
Such concerns highlight not only isolated cases but also reflect the changes in import structures and administrative standards across Vietnam. Korean companies need to transition from passive responses to continue growth in this trend.
Rationale of the Vietnamese Government Related to Public Health
Vietnamese authorities’ market adjustments are justified on the grounds of public health. Products with cancelled permit registration numbers inevitably fall into a management blind spot, a situation from which regulatory authorities cannot guarantee consumer safety.
Given the nature of cosmetics that come into direct contact with the skin, discontinued management, irrespective of expiration date, poses potential risks. This is the reason authorities announced the confiscation and disposal of all such products found.
This perspective that regulations are designed preventively suggests that Vietnam plans to refine control over imported cosmetics going forward.
Necessity of Strategic Response from Korean Companies
Thus, the strategic choices Korean companies can make in response are not straightforward. It’s increasingly difficult to sustain stable business solely through export structures, and it’s time to systematically design the complete import and distribution operations.
Emphasizing not only business strategies and export marketing but also permit management, post-quality care, and distribution network checks, calls for a comprehensive risk management system. In a market where both regulation and competition coexist, ‘management capability’ is more crucial than technology.
Sophisticated Standards of Consumers
Another aspect of permit cancellations is the sophisticated consumer orientation in Vietnam. Unlike the past where mere country of origin sufficed for ‘preference’, today, effectiveness and trust are far more crucial judgment criteria.
Amidst this backdrop, Korean companies must prepare more robustly and swiftly not just against regulations, but also legal and administrative issues arising externally from product capability. Simple classifications as import items are insufficient for survival.
Ultimately, the Vietnam market necessitates a strategy of selection and concentration. Competitiveness must be maintained by considering profitability, regulatory risks, and brand awareness comprehensively.
Conclusion
Vietnam government’s cancellation of import permits for cosmetics serves as a ‘warning signal’ indicating regulation and competition convergence, beyond simple market withdrawal. Comprehensive responses considering legal risks and distribution strategies are inevitable for stable market operations in the future.
remains committed to reaching both domestic and international consumers with innovative products and trustworthy quality in the K-Beauty cosmetics market. We will continue providing valuable products through consistent research and development.
