Changes, challenges and opportunities: ACA President on sustainability and regulation in APAC

Le said the cosmetics industry was facing a multitude of changes from different aspects, not least rapidly changing shifts in consumer behaviour.

“Consumers are continuing to focus on more natural and organic products as well as personalisation. With Chinese consumers travelling the world in massive numbers, it is changing the way the cosmetic industry does business.” ​

Focus on sustainability

One of the most important changes is the consumers’ attitude towards sustainability. While sustainability is not a new idea in Asia, Le believes consumers are only starting to understand what it really means.

“How many people really understand the meaning of sustainability? The level of consumers’ understanding of this trend still varies between country to country. In Asia, both government and consumers have started paying much more attention on sustainability,” ​she said.

While quality and safety used to be the most important aspect to beauty consumers, they are now taking a step forward to ensure companies and brands have morals that align with their own.

“You can see the level of complexity and level of understanding from the consumer on sustainability has increased tremendously compared to the past,” ​ she said.

“Today, consumers expect more transparency in terms of products. They want to know where and how ingredients have been sourced, what kind of packaging is used. Is it recyclable or not? They are looking for quality and safety but also want to understand the company’s sustainable practices,” ​said Le.

Unfortunately, said Le, not all companies place emphasis on sustainability.

“When it comes to sustainability, some companies, especially SMEs, think of it as a luxury. But the truth is, if they are not prepared to be on the same level as the multinationals, it will be hard to stay competitive since consumers have so many choices today.” ​

The topic of sustainability is such an important one, that this year’s ACA Leaders' Forum will place emphasis on it, Le added.

“At this year’s ACA Leaders' Forum, we want to spend a lot of time to talk about it. We want to make sure the industry is prepared with this mindset.”​

Policy changes and trade wars

Additionally, the ACA Leaders' Forum will touch on the regulation and policy changes happening in Asia.

With countries such as China, Korea, Taiwan and Indonesia making changes to their cosmetic laws, Le foresees big changes and challenges ahead for the industry.

“You can imagine if the company operates in all the different countries at the same time, they have to cope with multiple changes coming from multiple regulatory frameworks from different countries,” ​said Le.

She added: “The industry has to be very agile and flexible to cope with all the changes in order for them to be successful.”​

One of the most challenging policy changes happening in the ASEAN region is Indonesia’s mandatory halal certification law.

Le said complying with the law would be an enormous undertaking.

“The halal certification looks at the end to end process, from raw material sourcing to manufacturing sites, to the product itself. While the industry respects the law and regulation of the country, the implementation is not going to be easy for both multinational and small medium enterprises. This will require an even stronger partnership between the government and the industry in the coming year.”  ​

However, she also sees opportunities among the challenges. Similarly, Le also sees the trade tension between the US and China as a potential opportunity for the SEA region.

“If you look at the US-China trade war, there are obvious impacts to a certain extent. But I see opportunities as well. For example, some companies may look to SEA as the new place to drive growth and invest in our region. Opportunities are still plentiful, it just depends on how flexible and adaptable a company can be.” ​

In light of this, ACA will focus on these changes for 2020.

“Each year, we focus on a different area depending on the situation at that point in time. Right now, there are so many changes, like the cosmetic law changes in various countries. We have to ask, how can ACA be there? How can we be an advisor to the industry and help navigate through the challenges and continue to grow. That is going to be the key focus for 2020.”​