Selling many cosmetics under 100,000 VND and with non-luxurious packaging, owner Thorakao said he wanted to maximize cost savings to serve low-income customers.
The information was said by Dr. Huynh Ky Tran, Chairman of the Board of Members, Director of Lan Hao Company, which owns the Thorakao brand, within the framework of the Uni Tour discussion at the University of Natural Sciences jointly organized by the Association of High Quality Vietnamese Goods Businesses recently.
According to Mr. Tran, the company’s two main customer groups are rural women and workers, so they “definitely cannot sell at high prices”. Before that, he once told VnExpress that for every 5 dong of domestic revenue, 4 dong comes from rural areas.
“I can’t leave the village girl or the worker with a salary of 7-10 million VND who spends 3 million VND on accommodation, not to mention living expenses,” he confided.
Dr. Huynh Ky Tran (seated in the middle) and Ms. Vu Kim Hanh (on the right) at the discussion on November 21. Image: BSA
Thorakao is a once-famous brand, starting from a cosmetics factory founded by Ms. Ha Thi Lan Hao in the late 50s. After the country was unified, Mr. Tran – Ms. Lan Hao’s son-in-law – took over and ran the company for half a century.
The brand had a golden period, dominating the cosmetics market before 1975. After the subsidy period, Thorakao also returned to success, having been asked by Japanese, Korean, French investors… to buy shares or establish joint ventures in the late 1990s and early 2000s, but Mr. Tran refused.
Today, this brand is “silent” in the cosmetics market with mainly imported products, according to Ms. Vu Kim Hanh, President of the High Quality Vietnamese Goods Business Association. Kirin Capital’s report said that the scale of Vietnam’s cosmetics market in 2024 is estimated to reach more than 2.4 billion USD, with more than 90% imported.
Ms. Hanh believes that low price and unattractive design are two things that make it difficult for Thorakao to become famous and return to the top like before. “Honestly, Mr. Tran, don’t be sad, the bottle of Thorakao turmeric cream is ugly, round, bare, saffron yellow and not luxurious,” she commented.
Along with packaging, low prices are challenges in the cosmetics industry as well as many other industries, according to Ms. Hanh. “The current situation is that consumers have the mentality that high prices are good, and good products cannot be priced low,” she stated.
Dr. Tran answered that technically, the company’s team can make cream, powder, shampoo and hair care product lines with equivalent formulas, even ahead of foreign products. “It’s not that I don’t know how to do it or that I can’t keep up with people,” he said.
But in terms of design, he wants to minimize the cost of luxury packaging, a luxury marketing story that will make key customers inaccessible. “Over the past decades, many people have asked why good products are not promoted. If there is heavy advertising, elaborate packaging, and high prices for branded products, then why would farmers and workers buy them?” he said
Boss Thorakao revealed that there was a time when he faced the temptation to get rich quickly. Accordingly, the foreign importer once asked him to cooperate in changing the origin to set the selling price 2-3 times higher. Or domestically, it is not difficult to keep Thorakao intact and set up another company to do business in a more trendy way, like other cosmetic brands to earn high profits.
But in the end, he was satisfied with sticking with his low-income customers, keeping his business ethics and knowing enough. “Enough to eat, enough to wear, knowing enough is enough to be rich,” he said. In addition, as a doctor of chemistry and a physician, he is pursuing other health support research projects.
“My ultimate dream is to make useful products for human health, solutions from plants and nature, such as active ingredients from betel, to serve the people. That’s what I want to leave behind,” he said.
Sticking to the path of popular products, not fancy, does not mean Thorakao stands still or shrinks scale. Mr. Tran’s company still approaches trends such as e-commerce sales, adding new options for customers.
On the online channel, he once revealed that on average he can receive about 5,000-6,000 applications per day, with a peak of up to 9,000 applications. He expects this channel can help the company achieve 2025 revenue of over 100 billion VND, double last year’s.
This opportunity is not small when beauty is the fastest growing category online, according to the third quarter report of e-commerce data platform Metric. Specifically, in the past July to September period, Vietnamese people spent more than 17,700 billion VND buying nearly 135,000 beauty products on 4 platforms: Shopee, TikTok Shop, Lazada, Tiki, an increase of more than 14% over the same period in 2024.
The export segment also grows 15-20% each year, thanks to the production of processed goods for foreign partners. On average every month, Lan Hao exports 2-3 containers of cosmetics to Singapore, Egypt, and China… “Nowadays, the number of orders sometimes we can’t keep up with, up to tens of thousands of orders, not to mention foreign customers,” Mr. Tran said at the discussion.
In addition, this brand is also gradually expanding its product range, providing makeup powders, skin creams, lotions and hair serums for over 100,000 VND, with more elaborate packaging.