The Opportunity for British Luxury in South Korea
At recent Walpole member events with the British Ambassador to the Republic of Korea, Charles Hay, and the CEO of the BCCK, Sean Blakeley, the importance of Asia’s fourth largest economy, Korea, was undisputed.
Seen in the context of larger neighbours like China and Japan, South Korea remains a high priority for British luxury brands looking at their Asia business and often makes an outsized contribution relative to its market size. According to Bain & Company, sales of luxury goods in Seoul alone reached $7.6 billion last year and the number of multimillionaires in the city itself (those with net assets of £10 million or more) has almost doubled over the last decade to 4410 according a report by New World Wealth. Walpole member brands including Burberry, Church’s, DAKS, Ettinger and Mulberry all report strong performance in the market and optimism for future growth.
Delving deeper during the discussions, a number of important themes emerged as to why South Korea presents such an interesting opportunity for British luxury brands despite the recent political developments.
Ease of Doing Business
Firstly and perhaps most importantly, there is the country’s uncomplicated framework for conducting business. South Korea is ranked in 8th place for ease of doing business (by comparison China is placed at 96th and Japan at 27th). In terms of rule of law, regulatory efficiency and market freedom, Korea scores 91% for business freedom (China ranks 54% and Japan 82% respectively). Indeed many Walpole members reference the comparative ease of doing business in South Korea as a contributing factor in their Asian strategies and subsequent business performance. Aligned to the ease of doing business there are also practical routes to market through South Korea’s family-run chaebols [conglomerates] which dominate the fashion and retail landscape. While the chaebols are currently under pressure to reform, their continued influence means that brands can rapidly expand with the right partnership.
Importance of the Chinese customer
Secondly, Korea remains a popular regional shopping destination. As the Chinese consumer became a key driver for luxury globally, the influence of the Chinese tourists in Korea has grown. Chinese tourists are the biggest foreign spenders in Korea, with an average tourist spend of around £1530, six times that of the Japanese visitor to Korea. The recent political tensions between the US and China and the subsequent retaliatory measures by China on South Korean imports as well as the blocking of group travel from China to South Korea is of course being monitored closely generally concerns for any long term shift and impact are relatively low.
The domestic Korean customer
Member companies were all in agreement that the Korean consumers are highly sophisticated and discerning, tech savvy, with both a keen eye for creativity as well as a desire to seek out innovation and individuality. Importantly for British luxury brands, the Korean customer has a well-informed appreciation of highest levels of quality synonymous with brands such as DAKS, Church’s and Ettinger.
Historical & cultural ties
Beyond the desirability of British luxury goods and brands, there is also a deeper connection between Britain and South Korea on an historical and cultural level. Britain and British brands are held in high regard and affection since the UK was the second country, after the US, to establish diplomatic relations with Korea 133 years ago. Today that recognition and those early diplomatic and business relationships still play an important role in the appeal of the UK and British brands in the market.
Korea as a trend-setter
Another central theme to the conversations at recent Walpole events is Korea’s position as a trend setter across the region. Korean cultural capital sits at the crossroads of music, popular culture, fashion and entertainment and the status and appeal of Korean TV, particularly the stars of reality TV and K pop culture were cited as particularly influential. Products featured on the shows or worn by celebrities or digital influencers are immediate sell-outs and brands prioritise working with Korean TV celebrities as central to their wider
Asian strategies. Korea is also seen as innovator in terms of the retail landscape with inspirational in-store experiences, cutting-edge design and a willingness to support young designers and new brands.
Charlotte Keesing, Director of Public Affairs & International, Walpole.