**MALAYSIA**

### Summary

The beauty and health market in Malaysia is growing rapidly. Malaysians
spend an estimated \$500 million annually on cosmetics. Skincare
products are the most purchased items and contributed the largest sales
to cosmetic and toiletries. Increasing purchasing power by consumers
contributed to the growth in sales of skincare products. Men are paying
increasing attention to their appearance and increasing men's skin care
product purchases. Specialty products are gaining popularity,
particularly in regard to skincare. Facial care, body treatment and hand
care products have the highest sales in the skincare segment. Malaysian
consumers prefer to use imported skincare products as they associate
them with higher quality than local brands. As the total volume produced
by the local industry is still relatively low, imported products will
continue to remain in high demand especially from the middle and
high-income earners.

### Market Demand

Malaysians spend an estimated US\$500 million annually on cosmetics.
This is an upward trend from previous years, and reflects an increasing
trend among Malaysian consumers to procure beauty products. Consumer
sophistication, along with a higher awareness of local and international
products combined with a demand for higher-end customer-oriented
services, resulted in demand for lifestyle and specialty concept stores.
Today, beauty definitions include beauty with good health, self-esteem
and confidence. Skincare includes a regular fitness program, good
nutrition and a balanced, reasonably stress-free lifestyle. Trends in
skincare started influencing developments in cosmetics and toiletries.
Skincare products marketed with: whitening, firming, anti-aging and
anti-oxidants components carry significant selling advantages, and these
components have accordingly been increasingly adopted and applied to
other consumer cosmetic products. Forty-one percent of Malaysian women
interviewed in a recent survey carried out by Synovate (New Straits
Times, May 4, 2006) used skin- whitening products. Indigenous skincare
brands are using the synergy of health and beauty to sell nutritional
supplements that claim to nourish skin from within to beautify
complexion, which has resulted in a new market segment "nutricosmetics".

More skincare products target different areas of the body. Companies are
also coming up with specialty products with formulas to be applied at
different times of the day. For example, different eye creams for day
and night. The latest concept in skincare in Malaysia is skin food. It
is special food for the skin to "eat" and contains nutrients and
energetic ingredients from fresh plants and fruits to help maintain
healthy bodies. The future of skincare is topical and oral and
tailor-made to strengthen the skin's repair system.

![](media/image1.jpeg){width="0.9895833333333334in"
height="0.9791666666666666in"}

Skincare has the highest growth in the various segments of cosmetics and
toiletries products. Skin nourishing and anti-aging products are in good
demand and are expected to continue to be a fast-growing segment of the
skincare market. New ingredients such as amino-peptides are the latest
breakthrough in anti-aging as they claim to be effective at improving
the appearance of aging skin. Several local skincare companies
speculated that it will only be a matter of time before the hugely
popular methods of botox and restylane will soon be eclipsed in the
local market as more people are rejecting invasive methods, in favor of
topical treatments in order to deal with the cosmetic affects of aging.
Skin exfoliating procedures are evolving. Customers will expect more
exfoliating products that can be used at home, gentle enough to be used
on a daily basis and with additional features like brightening or
resurfacing.

The beauty and health market in Malaysia is growing rapidly. According
to trade sources, the cosmetic and toiletries industry recorded retail
sales of \$857 million in 2006, while sales volume is forecast to hit
\$1.1 billion by 2010. Skincare products attributed more than 20% of
this.

The growing affluence of Malaysian consumers, plus the heavy advertising
and marketing by premium brand companies contributed to the increase of
consumers' interest in premium brands. The leading premium brands are
Estee Lauder, Lancome, Shiseido, and Clarins.

Increasing usage of men using skin care products has added to the demand
of cosmetics & toiletries products. Metrosexual men no longer confine
their grooming products to toiletries such as deodorants, shaving &
shampoos only, but also include facial skin care, body care & perfumes.
The latest concept of retailing cosmetic and skin care products in
Malaysia is KENS apothecary. Inspired by Barneys Apothecary at Barneys
Madison Avenue, E6 Apothecary in Boston and Space NK apothecary in
London, KENS apothecary houses some of the finest skincare, fragrance
and other cosmetics only previously available in New York, Paris, Milan,
and Hong Kong. As the economy grows stronger and purchasing power
increases, consumers are more willing to indulge themselves. Hence,
competitiveness in the beauty business is increasing and niche products
are highly sought after. Many beauty and cosmetic companies have started
to include these ranges of new products and services to their clients.
For instance, Esthetics International Group Bhd. owns and operates
Leonard Drake professional skincare outlets, which provides beauty and
wellness treatments and services. It also exclusively distributes the
Dermalogica range of skincare products in Malaysia and other ASEAN
countries. The Institute Clarins, which provides retail and salon
service has been very successful in its specialized treatments for face
and body.

####### Market Data

## Beauty & Skincare Market

(U.S. Dollars in Millions)

+-------------------+-----------+------------+------------+-----------+
|                   | **2005**  | **2006**   | **2007     | **Pr      |
|                   |           |            | (es        | ojected** |
|                   | **(       | **(es      | timated)** |           |
|                   | actual)** | timated)** |            | *         |
|                   |           |            |            | *Growth** |
+-------------------+-----------+------------+------------+-----------+
| Total Market Size | 179       | 203        | 226        | 12%       |
+-------------------+-----------+------------+------------+-----------+
| Total Local       | 96        | 115        | 132        | 10%       |
| Production\*      |           |            |            |           |
+-------------------+-----------+------------+------------+-----------+
| Total Exports     | 36        | 40         | 44         | 11%       |
+-------------------+-----------+------------+------------+-----------+
| Total Imports     | 119       | 128        | 138        | 8%        |
+-------------------+-----------+------------+------------+-----------+
| Imports from U.S. | 23        | 24         | 25         | 5%        |
+-------------------+-----------+------------+------------+-----------+
| Exchange Rate     | 3.8       | 3.75       | 3.5        | 3.5       |
+-------------------+-----------+------------+------------+-----------+

> Source: World Trade Atlas & Department of Statistics, Malaysia
>
> \* This is an estimated figure. The latest production data available
> is for year 2003.

## Top 5 Exporting Countries to Malaysia in 2005

  -------------------------------- ------------------- -------------------
  Countries                        Imports (U.S.       **% Total Imports**
                                   Dollars in          
                                   Millions)           

  Thailand                         27                  23

  United States                    24                  20

  Japan                            20                  17

  France                           12                  11

  Taiwan                           4                   3
  -------------------------------- ------------------- -------------------

In 2005, the Malaysian skincare import market was approximately \$119
million. Imports from Thailand accounted for 23% of the total market,
followed with the U.S. with 20%. The total import of skincare products
in 2006 is estimated at \$128 million, an 8% growth.

The domestic cosmetics & toiletries industry is still a relatively small
industry in Malaysia. According to the Malaysian Industrial Development
Authority (MIDA), thirty companies are producing cosmetics and
toiletries products in Malaysia. Detailed information as to whether the
companies are producing skincare product are not available. Besides
these, about 50 small & medium size companies are doing contract
manufacturing for products such as shampoos & conditioner, hair
treatment/care and perfumeries.

### 

### 

### Best Prospects

The increasing standard of living among Malaysians has also increased
the level of sophistication and demand of the consumers. Cleansing with
soap and water are things of the past as more Malaysians, especially in
the urban areas, today demand quality and safe products. Skincare is
expected to continue having the biggest market share (about 26 %) of the
total cosmetic market share over the next few years. The increasing use
of air-conditioned offices, (which can have a drying effect on the
skin), coupled with higher spending power among a larger number of
consumers will likely continue to drive more consumer savvy Malaysians
to take an active interest in enhanced skincare.

![](media/image2.jpeg){width="1.25in" height="1.0104166666666667in"}

Sales of facial care products are further boosted by strong advertising
campaigns from skin care companies with an emphasis on anti-aging &
whitening. Anti-aging products with Vitamin C and collagen are highly
sought after. Skincare manufacturers have started offering non-surgical
skin care alternatives to consumers. For example, L'Oreal (M) Sdn Bhd
launched Micro-Dermabrasion kit and Chanel SA launched a Micro Solution
skincare kit in late 2005. These new innovations helped skin care to
maintain one of the highest growth rates in cosmetics and toiletries. In
addition, more Malaysian men have added skincare to their personal
grooming apart from deodorants, fragrance, and toiletries.

Demand for body firming products is also expected to grow as more
Malaysians realize the importance of looking trim and fit. The huge
growth in the health and fitness industry also influence the demand for
firming and anti-cellulite body care products. As the pressures of
modern life continue to mount, more and more new consumers are finding
rejuvenation, relaxation and holistic treatment in spa settings. The
current popularity of spa treatments, especially in urban areas, will
present opportunities for spa-inspired skincare products.

Demand for sun protection is expected to increase as consumers are
becoming more aware of the harmful damage of ultra violet rays to the
skin. Sun protection products are expected to grow as most Malaysians
prefer their complexion be as fair as possible in keeping with fashion
trends throughout Asia, hence the increase sales of skin whitening
products.

### Key Suppliers

####### 

Sales were sustained by increased urbanization, the rise in the number
of women working, and aggressive marketing and promotional activities of
the retailers, especially during mega sales periods. Up to July 2005,
almost 70,000 types of cosmetic products were registered with the Drug
Control Authority of the Ministry of Health. Imported products from
Thailand, United States, Japan, France and Taiwan dominate the market in
Malaysia.

The domestic cosmetics and toiletries industry generally involves
mixing, blending and formulation processes, using imported raw
materials. Many of these local companies are contract manufacturers for
overseas-established brands. Most of this contract work is directed
mainly at products such as shampoo and conditioners, other hair care
products, perfumes and cosmetics. The Federation of Malaysian
Manufacturers - Malaysian Cosmetics and Toiletries Industry Group
(FMM-MCTIG) reported there are now approximately 50 small and medium
sized domestic companies producing cosmetics. Main manufacturers of
cosmetics and toiletries are Colgate-Palmolive (M) Sdn Bhd, Follow Me
Industries Sdn Bhd, Formapac Sdn Bhd, Henkel (M) Sdn Bhd, Manufacturing
Services Sdn Bhd and Eng Kah Enterprise Sdn Bhd. The cosmetics and
toiletries market in Malaysia is highly competitive and very fragmented.
The dominance of multinational companies such as Colgate-Palmolive,
Unilever and L'Oreal is due to the strength of their financial power and
the variety of products offered. These companies also constantly come
out with aggressive marketing campaigns and promotional activities to
attract new consumers to buy their products.

In general, Malaysian consumers prefer to use imported skincare products
as they associate them with higher quality than local brands. As the
total volume produced by the local industry is still relatively low,
imported products will continue to remain in high demand especially from
the middle and high income earners.

### Prospective Buyers

Malaysians skincare concerns include the heat and humidity of the
climate, the drying effect on skin of working in hermetically sealed,
air-conditioned office buildings, the stress and pollution of the
environment, lightening the skin and areas of hyper pigmentation, acne,
and the effect of aging on the skin for an increasingly graying
population. These concerns translate into strong prospects for skincare
products and remain in broad consumption across all age and income
groups in Malaysia.

The current Malaysian population of 26 million is comprised of the
following age groups:

32.4% - less than 15 years old

63.3% - 15-64 years old

4.3% - 65 and older

### Market Entry

Skincare products are sold through the following channels:

a\. Supermarkets/hypermarkets

Supermarkets/hypermarkets remain the most important distribution channel
for skincare in Malaysia. Mass brands of skincare products are using
supermarkets & hypermarkets such as Giant, Tesco & Carrefour to reach
the mass market.

![](media/image3.jpeg){width="0.9479166666666666in" height="0.75in"}b.
Department Stores

The increase in standard of living among Malaysian led to higher demand
for quality products. Imported premium brands such as Estee Lauder,
Chanel, Christian Dior, Gucci, Bobby Brown, Clinique, La Mer and
Shiseido are usually sold over-the-counter in major department stores
such as: Isetan, Parkson, and Metrojaya.

c\. Pharmacy/Personal Care Stores

Pharmacies and personal care stores such as Guardian and Watson are the
most popular one-stop centers for mass brand skincare products. Brands
that cater to the mass market such as Neutrogena, L\'Oreal and Olay are
primarily sold at these outlets.

d.  Direct Sales/Marketing

Avon & Amway are the most popular direct sellers in Malaysia due to
their larger number of distributors who are able to reach consumers
living in rural and suburban areas. Other reputable brands such as
Sothy\'s and Thalgo are distributed by dealers. The products are only
sold at their beauty centers and beauty salons, as they also provide a
full range of skincare products and slimming and spa products.

e\. Specialty Stores

Specialty stores are becoming an important channel for premium brands.
Most of the specialty stores are located in cities such as Kuala Lumpur,
as these stores cater to consumers with higher purchasing power. The
more well-known specialty store players are The Body Shop, Crabtree &
Evelyn, L'Occitane and Sasa (from Hong Kong). The expansion in men's
grooming has also led to the specialty stores selling products largely
tailored to men's skincare products.

Advertising and promotion is crucial for skincare products in order to
create awareness of new products and build brand loyalty among
consumers. Most of the time consumers prefer to purchase brands that
they are familiar with or have previous experience with. Advertisements
in TV and the print media, especially women's magazines, are very
common. Samples of skincare products are distributed to individual
households and products in sachet form products are distributed to
individual households and products in sachet form are attached to
magazines. Free gifts are given during promotion periods and are
advertised in the local major newspapers and on the web. However,
Internet shopping is not yet an established channel for skincare. 

### Market Issues & Obstacles

In Malaysia, skincare products are under the cosmetic's definitions and
are regulated by the National Pharmaceutical Control Bureau. All
cosmetic products must be registered with the Drug Control Authority of
the National Pharmaceutical Control Bureau, Ministry of Health,
effective from January 1, 2004.

The Control of Drugs and Cosmetic Regulations 1984 requires that all
cosmetics in Malaysia:  

Be registered with the Drug Control Authority (DCA) of the National
Pharmaceutical Control Bureau

Manufacturers, importers and wholesalers must be licensed.

Manufacturers must disclose all composition/ingredients of any cosmetics
before they can be registered. The products must be manufactured,
packed, and stored under sanitized conditions as stipulated under the
good manufacturing practice (GMP) requirements. Products must be labeled
according to the following information:

name of the product and its function

instructions on how to use the product

a list of all the ingredients in the product

country of manufacture

name and address of the company responsible for the product

content - quantity in metric units of measurement

batch number

registration number

warnings or cautions, where necessary for safe use of the product

statement that declares the presence of bovine/porcine parts.

Registration of cosmetics can be conducted on-line and all the necessary
information and guidelines are available on the [National Pharmaceutical
Control Bureau](http://www.bpfk.gov.my/)\'s website.\
\
In general, the DCA uses three basic criteria to decide whether the
product is classified as a cosmetic. These criteria include site of
application, purpose, and composition or ingredient. If the skincare
product has medicinal claims, it needs to be referred to the Drug
Control Authority to ascertain its classification. For example, a beauty
cream that claims its ability to treat acne is classified as an OTC
product. All cosmetics claims on the products are vetted. Hence, all
claims generally are substantiated and supported. Concerns can arise
when a cosmetic product advertises health related claims. Under such
circumstances, the product needs to be registered under a different
classification such as medicinal and the advertisement needs to be
approved by the authority.

Currently, there is no duty for skincare products. However, as
stipulated in the regulations, as of January 1, 2004 all importers,
manufacturers, and wholesalers need to be licensed with the DCA before
they are allowed to manufacture, import or sell the products.

### Trade Events

CosmoBeaute Asia 2007

July 16-19, 2007, Putra World Trade Center. For more information visit:
[www.cosmobeauteasia.com](http://www.cosmobeauteasia.com/)

International Beauty Expo

June 21-24, 2007, Kuala Lumpur Convention Center. For more information
visit:
[www.elite.com.my/ibe07/index_ibe.html](http://www.elite.com.my/ibe07/index_ibe.html)

### Resources & Key Contacts

▪ [**The Cosmetic, Toiletries and Fragrance Association of
Malaysia**](http://www.ctfamalaysia.org/)

▪ [Dermatological Society of Malaysia](http://www.dermatology.org.my/)

▪ [National Pharmaceutical Control Bureau](http://www.bpfk.gov.my/)

▪ [Direct Selling Association of Malaysia](http://www.dsam.org.my/)

### For More Information

The U.S. Commercial Service in Kuala Lumpur can be contacted via e-mail
at: <natila.ahmad@mail.doc.gov>; Phone: 60-3-2168-5101; Fax:
50-3-2142-1866; or visit our website:
[www.buyusa.gov/malaysia](http://www.buyusa.gov/malaysia).