Set up a cosmetics company in Vietnam

The increasing demand for beauty leads to the current market appearing a lot of beauty products, skin care and profits from the cosmetics business become more and more. Grasping that trend, many individuals or organizations are eager to establish cosmetic trading companies. So, what are the conditions for establishing a cosmetics company? To answer customers’ questions, Viet An Law Firm offers an article on conditions for establishing a cosmetic company.

Legal basis

• Civil Code 2015.
• Investment Law 2020.
• Enterprise Law 2020.
• Decree 93/2016/ND-CP regulates conditions for cosmetic production.
• Circular 47/2019/TT-BTC stipulates the collection rate, regime of collection, payment, management and use of fees for providing business information and business registration fees.

What does “cosmetic company” mean?

A cosmetics company is a type of enterprise specializing in manufacturing, selling and distributing care and beauty products such as cosmetics, skin care and other related products.

Set up a cosmetics company in Vietnam

According to the provisions of the Investment Law 2020, to be able to set up a cosmetics company in Vietnam, foreign investors will have to have an investment project and be granted an investment registration certificate in Vietnam.

Investment conditions for foreign investors are conditions that foreign investors, when carrying out investment activities, are required to satisfy the conditions for investment in conditional investment lines as prescribed in international treaties on investment,  relevant laws, ordinances and decrees. Accordingly, the import and distribution of products is an investment field that Vietnam has committed to open when joining the WTO. Therefore, in case investors from countries and territories join the WTO, they will be allowed to trade cosmetics in Vietnam.

In addition, in the case of only trading cosmetics (not manufacturing) but only importing them for resale, this is not a conditional business line. Therefore, it is only necessary to meet the conditions for setting up a business to be able to trade cosmetics in Vietnam. In the case of cosmetic production, this is a conditional business. Accordingly, both foreign and domestic investors will have to fully meet the following conditions:

Conditions on the type of business and business name

Depending on the type of enterprise, when it is necessary to choose the type of business to suit the number of members, capital contributors as well as the ratio of business target capital of their company.

Currently, the enterprise law stipulates that there are popular types of enterprises as follows:

• Private enterprise.
• Limited liability company (1 member or 2 or more members).
• Joint stock company.

For the name of the cosmetics trading company can also be Vietnamese or foreign language. If the name is in a foreign language, the name must be printed or written in a smaller font size than the Vietnamese name at the company’s business locations. The name must not be identical or confusing with other companies that have been registered nationwide and must ensure at least two elements in the name: Type of business and proper name.

Conditions on charter capital level

Based on the law on enterprises, cosmetics business is not in the prescribed cases where the minimum and maximum capital of the company is required. Therefore, cosmetic companies can freely choose the charter capital to set up this type of company.

Therefore, the selection of charter capital to register should be appropriate and corresponding to the actual conditions of the company to be more favorable in doing business, in order to create the most optimal profit from the capital that they spend.

In addition to the general conditions for business establishment, if you want to set up a cosmetics company, you also need to meet the following additional conditions:

 Conditions on the operation of cosmetic productionset up

• The cosmetics business must be legally set up;
• Business establishments must have certificates of eligibility for cosmetic production according to Form No. 01 specified in the Appendix enclosed with Decree 93/2016/ND-CP.

Issuance of certificates of eligibility for cosmetic production

Accordingly, in order to be granted a certificate of eligibility, a cosmetic manufacturer must meet the following conditions:

Personnel conditions:

• The person in charge of the facility’s production must have specialized knowledge of one of the following specialties: Chemistry, biology, pharmacology, or other relevant disciplines that meet the requirements of the job.

Conditions of facilities:

• Having locations, areas, workshops and equipment meeting the requirements on production lines and types of cosmetic products that such establishments plan to produce as stated in the dossier of application for the Certificate of eligibility for cosmetic production.
• Regarding the storage of raw materials, packaging materials and finished products, there must be a separation between raw materials, packaging materials and finished products.
• In addition, cosmetic manufacturing facilities must have separate areas for storing flammable and explosive substances, highly toxic substances, discarded, recalled and returned materials and products.

Meet the conditions of the quality management system as follows:

• Raw materials and auxiliary materials used in the production of cosmetics must meet the quality standards of the manufacturer.
• Water used in the production of cosmetics must at least meet national technical regulations on drinking water promulgated by the Minister of Health.
• Semi-finished products put into production must have quality standards and meet the manufacturer’s quality standards.
• There is a production process for each product.
• There is a quality inspection department to check the quality of raw materials, semi-finished products, products waiting for packaging and finished products.
• There is a document record-keeping system.

Some questions related to the conditions to set up a cosmetics company

Timeline to set up a cosmetics company

When preparing and completing the application submission at the Business Registration Office, timeline to set up a cosmetic company will normally be from 03-05 working days from the date of receipt of a complete and valid dossier, you will receive the business registration certificate. However, in reality, it can take about 01-2 weeks depending on whether your application is valid or not. Therefore, for convenience as well as speed in setting up a cosmetics company, you can use the company establishment service at Viet An Law.

Cosmetic Company Formation Fee

According to the provisions of Circular 47/2019/TT-BTC stipulating that when registering the establishment of a cosmetic company, you will have to pay some types of fees as follows:

• Cost of submitting an application and publishing business registration contents on the National Business Registration Portal: VND 100,000 (one hundred thousand VND).

In addition, when setting up a cosmetics trading and manufacturing company, you will have to pay additional fees as follows:

• Cosmetic product announcement fee: 500,000 VND (five hundred thousand VND)/ announcement set.
• The fee for appraisal of cosmetic production conditions and issuance of the Certificate of eligibility for cosmetic production is VND 6,000,000 (six million VND) / establishment.

Does a foreign-owned cosmetics company planning to retail cosmetics need to apply for any licenses in Vietnam?

In this case, the company needs to carry out procedures for applying for a Business License and a Retail Establishment License. In addition, if the company directly imports cosmetics, it is necessary to carry out procedures for announcing the circulation of imported cosmetics.

If you want to find out more information about the conditions for opening a cosmetic company, announcing the circulation of imported cosmetics, please contact Viet An Law Firm for the best support!