The cosmetics industry is one of the sectors that successfully withered the impact of COVID-19, thanks to e-commerce and beauty influencers’ rise in the UAE. Even though the industry appeared to be highly saturated due to multinational companies’ presence, the popularity of Instagram and YouTube have led to the mushrooming of niche cosmetics startups. Furthermore, a young population that gives priority to ‘looks’ makes the prospect of business setup in Dubai viable for beauty entrepreneurs.
Related: Top 5 Mistakes You Should Avoid While Setting Up E-Commerce Business in Dubai
Setting up a cosmetics business in Dubai may make you the next Huda Kattan or Kylie Jenner, or you can even set up the next L’Oreal in the long run. You need to acquire adequate knowledge about procedures and requirements for which the assistance of business setup consultants in Dubai can be sought.
Read ahead to understand the five insights you should consider to set up a cosmetics business in Dubai:
1. Scope for New Cosmetics Businesses
The global cosmetics industry is worth USD 532 billion and is expected to hit USD 716.6 billion by 2025. Also, experts assert that the cosmetic industry is resistant to economic downturns as beauty conscious consumers consider cosmetics on par with the essentials and won’t stop buying. A report by Euromonitor says that leading international players in the beauty industry is facing stiff competition from emerging niche businesses.
The report projects South Korean brands and local Arab brands as two major driving forces that pose stiff competition to the international players. Entrepreneurs can set up a cosmetics business in niche segments such as vegan and halal beauty products that have found success in the UAE market so far.
2. Opportunities in Mainland and Free Zone
Be it is a manufacturing unit or a retail shop, you need to decide to set up the business in the mainland or free zone. By setting up a business in the mainland, you are getting the golden opportunity to sell your products directly anywhere in the UAE. In contrast, a free zone allows you to trade only within the free zone or carry out imports / re-exports.
If you weigh on the cons, a mainland company will only allow 49% ownership to foreign investors. The law requires the rest of the shares to be held by a local sponsor who must be a UAE national. It is a strategic decision, but you can make the right choice with the help of business setup consultants in Dubai who are experts in UAE laws and market dynamics.
3. Product Registration Requirements
While setting up a beauty business in Dubai, you need to ensure that cosmetic products are safer for public use. Cosmetics are highly sensitive because the presence of any harmful substance may put human lives in peril. In a bid to eliminate such risks, the Dubai government has made it mandatory for every manufacturers, importer and distributor to register their consumer products with Dubai Municipality.
The Municipality will review the packaging, labelling and would conduct laboratory tests on the products to ensure the safety of the cosmetics products. Whether you are a mainland or free zone company, it is mandatory to register the products with Dubai Municipality before selling the beauty products. Business setup consultants in Dubai who provides product registration services can help you out to ensure compliance in this regard.
4. E-commerce V/S Physical Sale of Products
The rise of e-commerce is perhaps a positive impact of the COVID-19 pandemic, which has led to a drastic turn in the process of business setup in Dubai. The mandatory lockdowns and social distance requirements in 2020 forced consumers to adopt a flexible purchase pattern that minimises health risks. As a result, e-commerce platforms recorded an unprecedented surge in demand for consumer products, including cosmetics.
Both the Department of Economic Development (DED) and the free zones offer affordable e-commerce license packages in Dubai for entrepreneurs. Free zone e-commerce companies need to have an agreement with a logistics company if they plan to trade in the UAE market. You need not worry about the process of obtaining an e-commerce license if you are applying through business setup consultants in Dubai.
5. Being an Influencer in Cosmetics Sector
Being a beauty influencer on social media platforms such as Instagram, TikTok, YouTube, and Snapchat is a good opportunity to make a profit in the cosmetics industry. Big names in the beauty industry, such as Huda Kattan, started as beauty bloggers and eventually established a successful cosmetics business in Dubai. Being an influencer or blogger in the UAE requires a license approved by the National Media Council (NMC).
You can have an influencer license from free zones such as Dubai Media City, Sharjah Media City (SHAMS) and Ras Al Khaimah Economic Zone (RAKEZ). However, the gifts, freebies and money the influencers receive for endorsing brands are liable for VAT in the UAE. If you plan to choose the influencer route to form a cosmetics company, business setup consultants in Dubai can help you obtain the permits apart from assisting in VAT matters.
Build Your Beauty Empire with Our Guidance
Setting up a cosmetics business in Dubai is a profitable idea, given the city’s cosmopolitan outlook. The rise of e-commerce, social media platforms, and influencers’ emergence has positively influenced the cosmetics market in Dubai. Entrepreneurs can take advantage of the myriad opportunities of business setup in Dubai with the help of company formation specialists such as Jitendra Business Consultants (JBC).
JBC’s business setup consultants in Dubai can guide you in applying for a mainland or free zone license, selecting the business activity, opening a bank account, processing visa and other documents. Being a one-stop solution for business setup in Dubai, JBC also provides product registration services for cosmetics companies.