Brand Origin Transparency Issues in Indonesia and Malaysia

Chinese-manufactured skincare brands are experiencing rapid market penetration in Muslim-dominated Southeast Asian countries, particularly Indonesia and Malaysia, despite concerns about transparency regarding their manufacturing origins. These brands leverage competitive pricing and perceived quality to capture market share, while their marketing strategies often obscure their Chinese manufacturing roots.

The case of Skintific illustrates this market dynamic. Launched in Indonesia in 2021, the brand has achieved significant market presence through celebrity endorsements and widespread retail distribution. However, consumers like Malaysian resident Farhana have expressed hesitation about purchasing these products after discovering their Chinese origins, particularly regarding halal certification concerns.

Marketing Strategies 

Chinese-made skincare brands operating in Southeast Asian markets employ sophisticated localization strategies that minimize emphasis on their manufacturing origins. Unlike Western and Korean brands that openly advertise their foreign heritage, these Chinese brands position themselves as products specifically developed for Indonesian and Malaysian consumers.

Skintific’s marketing exemplifies this approach, featuring Indonesian film star Nicholas Saputra as a brand ambassador while providing minimal information about the company’s origins or manufacturing locations on their website. The brand’s “About Us” page contains no references to China, despite product packaging clearly stating “Made in the PRC” in small print.

Similar brands including Glad2Glow, The Originote, and Lavojoy follow comparable marketing patterns, often being displayed in “local brands” sections of pharmacies despite their Chinese manufacturing origins. This positioning creates consumer confusion, as demonstrated by pharmacy staff observations that customers frequently assume these are domestic Indonesian brands.

Historical Context and Consumer Concerns

Consumer wariness toward Chinese-manufactured products stems from historical quality control scandals, particularly the 2008 baby formula crisis where melamine contamination led to multiple child deaths. These incidents have created lasting concerns about product safety and quality control in Chinese manufacturing.

According to Trissia Wijaya, a senior research fellow at Ritsumeikan University in Kyoto, Chinese companies traditionally prioritize quantity over quality due to their large domestic market focus. While quality control measures have improved, price competition often limits innovation investments that would guarantee higher quality standards.

Indonesian regulatory authorities have reinforced these concerns through past warnings about illegally imported Chinese cosmetics. In 2007, the Indonesian Food and Drug Authority (BPOM) reported that most illegal Chinese cosmetic imports contained mercury, which poses significant health risks. Additionally, in December 2020, BPOM seized 10.8 billion Indonesian rupiah worth of illegal cosmetics, primarily from China and South Korea.

Halal Certification Challenges

Religious compliance represents a critical concern for Muslim consumers in Indonesia and Malaysia. Chinese-manufactured skincare brands face scrutiny regarding halal certification, as consumers worry about ingredient sources and production processes that might not align with Islamic dietary and lifestyle requirements.

Rochmaeda Kurnia Fauziah, an Indonesian consumer who previously used Skintific products, expressed surprise upon learning they lacked complete halal certification. She stated she would discontinue use until proper halal certification is obtained, highlighting the importance of religious compliance for Muslim consumers.

When questioned about halal certification, Skintific representatives indicated that halal logos are not yet displayed on packaging because the certification process is ongoing. However, they emphasized that products are BPOM certified and mostly vegan and cruelty-free.

Competitive Landscape with Local Brands

Chinese brands enter markets already dominated by established local halal-certified competitors. Indonesian brands like Wardah, owned by Paragon Technology and Innovation, pioneered halal skincare and makeup for Muslim markets at accessible prices since 1995. Other successful local brands include ERHA (established 1998) and Somethinc (launched 2019), all maintaining halal certification.

These established local brands provide consumers with religiously compliant alternatives, creating competitive pressure for Chinese brands to obtain proper halal certification to compete effectively in Muslim-majority markets.

Regulatory Compliance and Market Access

Despite origin concerns, Chinese-manufactured brands must meet local regulatory standards to operate legally in Indonesian and Malaysian markets. All products require approval from relevant authorities such as Indonesia’s BPOM before retail distribution.

However, regulatory approval does not automatically address consumer concerns about halal compliance or cultural appropriateness. Brands must navigate both legal requirements and cultural sensitivities to achieve sustainable market success.

Global Supply Chain Transparency

Skintific representatives claim their products utilize global supply chains, sourcing raw materials from the Netherlands, Germany, the United States, and Japan, while manufacturing occurs in China and South Korea. The brand markets itself as using formulas from laboratories in South Korea and Canada.

This global sourcing narrative attempts to address quality concerns while maintaining cost advantages associated with Chinese manufacturing. However, the company declines to reveal founder and ownership information, limiting transparency about corporate governance and decision-making processes.

Distribution and Market Penetration

These Chinese brands achieve rapid market penetration through multi-channel distribution strategies, including pharmacy chains, e-commerce platforms, and celebrity endorsements. Skintific products are reportedly available across Thailand, Singapore, the Philippines, and Malaysia, indicating regional expansion ambitions.

The brands’ success in pharmacy distribution channels, often positioned alongside local products, demonstrates their ability to integrate into established retail networks despite their foreign manufacturing origins.

Consumer Decision-Making Factors

Consumer purchasing decisions in these markets involve multiple considerations including price, perceived quality, halal compliance, and brand origin transparency. While some consumers like Rochmaeda Kurnia Fauziah acknowledge product effectiveness, religious compliance ultimately takes precedence in their purchasing decisions.

Malaysian consumer Farhana represents another consumer segment willing to consider these products pending proper halal certification, suggesting that addressing religious compliance concerns could unlock additional market potential.

Future Market Implications

The success of Chinese skincare brands in Southeast Asian markets depends on their ability to address transparency and certification concerns while maintaining competitive pricing. Brands that achieve proper halal certification and improve origin transparency may capture larger market shares in these growing Muslim-majority markets.

However, continued reliance on ambiguous marketing strategies regarding manufacturing origins may limit long-term consumer trust and market penetration, particularly as consumers become more informed about product sourcing and corporate transparency expectations.

Original Article:

Llewellyn, A. (2024, May 5). Are Chinese-made skincare brands downplaying their origins to appeal to Southeast Asians? South China Morning Post. Retrieved from https://www.scmp.com/week-asia/lifestyle-culture/article/3261396/are-chinese-made-skincare-brands-downplaying-their-origins-appeal-southeast-asians