October 04, 2012 00:00 By KWANCHAI RUNGFAPAISARN
Thailand should take advantage of its geographical location and established cosmetics market to cash in on the Asean Economic Community (AEC), which comes into effect in 2015, an expert said yesterday.
However, an important challenge for local cosmetics-makers is the increase in labour costs as a result of the government’s Bt300 minimum-wage scheme, which will increase companies’ production costs, said Sarah Gibson, exhibition director of Reed Exhibitions’ “in-cosmetics Asia” trade show.
Manufacturers need to manage the cost issue cautiously, she added.
Thailand could get a geographical advantage as it is located at the centre of Asean, she said, pointing out that the government had also invested heavily in the construction of roads and railways from North to South and East to West within the Kingdom.
“Your cosmetics technology is more advanced compared to other Asean countries, as can be seen from the wider range of products that are on offer. You can use that knowledge to create more advanced products and utilise the distribution network to increase exports. Myanmar is just opening up as a country and a lot of businessmen are already there,” she said.
Gibson said Thailand also had the highest number of Facebook users in the region. Internet-based initiatives are important for many cosmetics brands to softly promote their products and create a group of loyal customers. Running a successful social-media campaign can therefore enhance a brand.
LARGE, SOPHISTICATED MARKET
Thailand’s cosmetics market is expected to be worth about US$5.2 billion (Bt159 billion) this year, up from $4.8 billion last year.
“Thailand’s cosmetics market is more sophisticated [than elsewhere in Asean]. Original-equipment manufacturing [OEM] business is very strong and the country should work on that to increase exports,” said Gibson.
She said that Indonesia would inevitably overtake Thailand to become the biggest cosmetics market in Asean, thanks to its young population. However, the Indonesian market is very focused on personal-care products.
She added that while the global trend was to make more cosmetics under private labels, the economic downtown was leaving people with less to spend and they would be more selective and cost-conscious.
The problem with OEM is that Thai manufacturers get a very low profit margin in comparison to having their own brands. However, they must have good products and the right marketing to ensure the successful launch of their own brands, said the executive.
Gibson said that regarding the upcoming AEC, small and medium-sized enterprises in Thailand, as well in countries such as the Philippines, required their government to further explain how to translate free trade and the single market into business opportunities.
“In-cosmetics Asia”, to be held from November 6 to 8 at the Bangkok International Trade and Exhibition Centre, will showcase the latest trends in the personal-care industry.
Organised by Reed Exhibitions, the show is expected to attract 300 exhibitors as well as 5,000 trade visitors.