Korea fashion industry stands at crossroads

This is the first of a three-part series on Korea`s textile and fashion industry. -- Ed.





Korea`s textile and fashion industry was one of the key engines of the country`s economic growth during the 1970s and 80s. The industry grew 15 percent each year until it reached its peak in the mid-1990s.

Much of the industry`s competitiveness, however, relied on cheap labor, with little focus on the production of quality apparel and design.

The 1997-98 financial crisis harshly battered the textile and fashion industry too, as consumers sharply cut back spending on clothes. Many companies collapsed.

The Korean economy recovered from the crisis relatively quickly, but the industry was still struggling.

Since the World Trade Organization removed textile quotas in 2005, the global industry saw developing countries such as China and India invading the market with low-priced products, taking advantage of cheap labor.

As a result, Korean textile companies rapidly lost their competitiveness in overseas markets such as Europe and North America. At home, the Korean industry also faced a number of negative factors including high oil prices, weak Korean won and the fast-growing influx of imported textiles and finished garments.



Regaining confidence



The Korean textile and fashion industry seems to be regaining confidence. Thanks to its continuous efforts to develop technology, adapt to the market trends and focus on creative designs, the industry has now recovered to its pre-crisis level and overseas shipments are expanding, according to industry officials and data.

Last year, exports by Korea`s textile and fashion industry stood at $13.4 billion, up 2.5 percent from the previous year. It was the first turnaround following seven consecutive years of export contraction since 2000 when it peaked at $18.8 billion.

"Local companies have been making determined efforts to introduce more high value-added products and strengthen global marketing," said Ha Myeng-keun, vice chairman of the Korea Federation of Textile Industries.

"We expect exports will continue to grow 2.6 percent this year to reach $13.8 billion," Ha said in an interview with The Korea Herald.

Ha added that the industry still contributes a lot to the Korean economy, in terms of exports and job creation. According to the KOFOTI, the industry`s exports accounted for 3.6 percent of the country`s total exports last year. It employs nearly 260,000 people, which accounted for 8.9 percent of the total of employees in the manufacturing sector in 2006.

Experts say this is an important time for Korean fashion and textile companies and they should continue to develop new high-tech fibers and materials to help the nation become a world-class textile powerhouse.

"Korean companies should try to weave a new growth pattern by focusing on technology, quality and design rather than waging a losing cost battle with its Asian competitors," said Park Jae-ok, professor of clothing and textile department at Hanyang University in Seoul.

Ha agreed.

"A number of local companies are expanding their business by developing high value-added products such as aramid fiber and tire cords. But they still need to develop more alternative materials which can be applied to aerospace, electronics technology and medical uses," Ha said.

Aramid fiber, one of the strongest fibers in the world, has opened possibility that it can replace steel in manufacturing cars, yachts or even airplanes by reinforcing outer-structures and reducing fuel consumption. Tire cords are fabric reinforcements that boost a tire`s durability and safety.

Now Kolon and Hyosung produce the two respective industrial textiles.

Ha said that high-value industrial textile products in Korea still account for about 25 percent of the whole textile production whereas they reach 60 to 70 percent in countries like the United States, Japan and Europe.



Quality products and brand image



Prof. Park also stressed the importance of enhancing brand values and strengthening marketing strategies.

"Some Korean products already excel past those made in other developed countries. But they are quite undervalued due to the low brand image," she said.

"Many Korean companies haven`t fully recognized yet the importance of marketing strategies and enhancing brand value in the global market," she added.

The local fashion market has seen a dramatic growth in tandem with the development of the country`s economy,

As of the end of 2007, Korea`s fashion market was estimated to be worth 21.38 trillion won, nearly 40 percent increase from 10 years ago, according to statistics compiled by the Samsung Fashion Institute.

The market has also undergone big changes. Now more consumers pursue different and unique styles and values. Take the markets for men`s suits, casual wear and sportswear for example. There are a growing number of multi shops, concept stores and online shops targeting such niche markets.

Korea`s fashion market is now characterized by two dominant markets: one for primarily domestically-produced, inexpensive apparel lines and the other for foreign high-end designer brands, imported mostly from the United States and Europe.



Korea`s fashion industry



Women`s apparel and men`s suit markets are showing signs of a slowdown. Sportswear and casual wear markets, in contrast, are growing rapidly, thanks to lifestyle changes among consumers placing greater importance on leisure activities.

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The market growth has also been affected by young consumers in their 20s and 30s. Known as the "want-it-all" generation, they tend to buy cloths frequently to keep up with the fast-changing fashion trend. Their consumption pattern contrasts with that of older generations who prefer clothes of good quality and attach little importance to designs.

Such a trend is a boon to foreign fashion brands rushing into Korea.

In 2006, imports of finished apparels amounted to $4.18 billion, up a 15.8 percent increase from a year ago. The figure is expected to increase this year and next year. Global foreign brands such as Zara, H&M and Topshop are targeting brand-savvy consumers by forming partnership with or acquiring Korean fashion companies.

A recent research on Korean customers` behaviors found that most of them associate imported brand names and higher prices with superior quality.

For Korean consumers, wearing luxury brands is a way of showing off one`s social status and wealth. Although most imported fashion products are priced nearly 30 percent higher than the products selling in their country-of-origin, an increasing number of customers are being drawn to the imports.

In order to overcome the foreign challenges, experts advise, local companies should enhance their quality competitiveness in the local market. They say marketing is a more serious problem than design.

"There are a lot of Korean designers who excel in the global market. But local companies are losing them because they have no effective marketing strategy for their products," said Prof. Park of Hanyang University.

By Cho Chung-un

(christory@heraldm.com)