Ketmanee Lertkitcha, Executive Board, Dep. Sec. General Chairman of Health & Beauty Products Cluster, The Federation of Thai Industries
Customs data shows that in the first three quarters of 2023, China’s exports of cosmetics and personal care products amounted to 34.861 billion yuan, marking a cumulative year-on-year growth of 26.6%. China’s cosmetics exports are thriving.
At the same time, how Chinese cosmetics brands evolve from quantity to quality, and their positioning on the international stage, has become a new topic of this era. During the 2023 FORUM ON BEAUTY ECONOMY AND SUSTAINABILITY, ONE OF ZGC FORUM SERIES OF ACTIVITIES, the “Trends Discussion” column, with a keen eye, interviewed representatives from ASEAN member countries such as Myanmar, Thailand, Malaysia, as well as leaders of cosmetics industry associations from France, Europe, and other places. They dissected global trends in the beauty market and key regulations, aiming to support companies in their international expansion. In this interview, Ketmanee Lertkitcha, Executive Board, Dep. Sec. General Chairman of Health & Beauty Products Cluster, The Federation of Thai Industries, was interviewed.
CHAILEEDO: The cosmetics industry in Thailand is substantial in size. Data shows that in 2022, the revenue of the cosmetics market in Thailand reached $82.7 billion baht($2.37 billion). Can you provide us with an overview of the Thai cosmetics market, including market size and major brands?
Ketmanee Lertkitcha: The Thai cosmetics market is mainly dominated by domestic companies, which hold an 85% market share, while the remaining 15% is primarily composed of imported products from Europe, Japan, South Korea, and China. Among the imported products, brands from Europe, Japan, South Korea, and China play a significant role. Additionally, the export business of Thai cosmetics is flourishing, with the Philippines being the largest export destination, accounting for approximately 19% of the total exports. Cambodia, Laos, Myanmar, and Vietnam follow closely, comprising around 21% of the total export volume.
The Thai market offers a wide variety of brands, with local and international brands competing for attention. International brands such as those under the umbrella of Unilever, L’Oréal, and Lancôme have performed well in terms of sales. However, renowned international brands like Estée Lauder and Lancôme may not be as suitable for the tropical country of Thailand, as Thai consumers tend to prefer locally made beauty products with natural herbal ingredients.
Social media marketing has become an essential tool for Thai cosmetics brands. Thai consumers tend to trust and follow the recommendations of key opinion leaders (KOLs) who align with their interests. Therefore, leveraging social media platforms and collaborating with influential KOLs can greatly influence a brand’s success in the Thai market.
CHAILEEDO: One of the best-selling skincare products in the Thai beauty industry is skin whitening products. However, due to changing mainstream attitudes and concerns about harmful ingredients used in such products, resistance to this specific market segment is increasing. How do you think this situation can be improved?
Ketmanee Lertkitcha: Skin whitening has always been highly sought after by consumers in Asian countries such as Japan, South Korea, and even China. Consumers tend to prefer whitening products that show immediate effects, so some brands may include ingredients like talc in their whitening products. According to the “ASEAN Cosmetic Directive” list of prohibited ingredients, harmful substances like hydroquinone cannot be added to whitening products. While this ingredient can quickly lighten the skin, it can also harm internal organs. Once discovered, the manufacturing company of such products will face fines and be included in a blacklist.
CHAILEEDO: It has been reported that the demand for cosmetics among the upper-middle-class in Thailand is increasing. Does this imply that there is significant potential for high-end cosmetics in Thailand?
Ketmanee Lertkitcha: The upper-middle class has relatively more financial freedom, but that doesn’t mean they are willing to spend a high price on cosmetics, as higher-priced cosmetics also imply higher marketing expenses. They place greater importance on whether the price of a product matches its ingredients, quality, efficacy, and other factors.
CHAILEEDO: According to reports, 72% of cosmetics in Thailand are sold domestically, while 28% are exported to crucial markets such as ASEAN, Japan, Australia, South Korea, and China. Additionally, offline shopping dominates the Thai market. So, do you have a positive outlook on Chinese domestic brands expanding into Thailand? What recommendations do you provide?
Ketmanee Lertkitcha:In fact, I have indeed seen some Chinese cosmetics brands entering Thailand, but the proportion is relatively small. One of the challenges for Chinese cosmetics companies entering Thailand is the lack of localization because most local Thai brands originated as OEM (Original Equipment Manufacturer) before developing their own brands. When people mention these brands, they recognize them as Thai local brands.
My advice for Chinese domestic brands entering Thailand is to comply with the local sales agreements. Products sold in Thailand need to fill out a notification form, which includes information such as the brand name, purpose, manufacturer, distributor, assembler, and other details. The product labels need to indicate all the ingredients, and for restricted ingredients, the percentage of their addition must be specified. After the products are launched, market surveillance officers will randomly inspect the products on sale. If any issues are found during the inspection, the product will be taken off the shelves, and the company may face rectification, penalties, and other consequences.
CHAILEEDO: Thai local brands like Mistine and Beauty Buffet are highly favored by Chinese consumers. What are your expectations for the future development of Thai brands in China?
According to our observations, Thai cosmetics initially gained popularity among Chinese consumers due to cross-border tourism. Chinese consumers who traveled to Thailand brought back products they found effective and shared their experiences with others in China. This is how brands like Mistine, BeautyBuffet, and SnailWhite became popular. For instance, Mistine gained popularity when Chinese consumers who visited Thailand in the past purchased many of their cosmetics products. In 2016, Mistine officially entered the Chinese market and achieved significant success through extensive influencer marketing and localization efforts. Therefore, I believe that with the resurgence of cross-border tourism, consumers who visit Thailand will discover more Thai beauty brands and bring them back to China. I am confident that Thai beauty brands will continue to gain popularity among Chinese consumers in the future.
