This is the third of a four-part series on Korean companies` efforts to foster premium brands and strategies to promote marketing of high-end products. -Ed.
By Cho Chung-un
Korean companies have recently been rushing to link up with foreign luxury brands in order to attact the kind of customers who love to show off expensive products with prestigious logos.
The local retail market has no exception, with foreign luxury houses quickly expanding business and introducing high-end culture from the West. French Jewelry house Cartier has chosen Seoul for its first flagship store in Asia and Prada opened an experimental exhibition there last April.
Despite the low consumption sentiment due to the recent economic recession, the sales of luxury goods have gone up - rapidly.
In February, sales of luxury goods at department stores across the country went up a record 47.7 percent on-year and 23.6 percent in March and 14.7 percent in May, according to the Ministry of Knowledge Economy.
"Luxury products have gained popularity not just from upper-class customers. Despite the economic recession, the country`s luxury market has remained even firmer than before," Han Sang-hwa, an analyst of Tongyang Investment Bank, said.
The principle of luxury has also been adopted from the country`s service sector to department stores, hospitals and banks offering "one and only" concierge service.
"Korea is one of the fastest growing luxury markets in the world and also an interesting market," said Jean-Noel Kapferer, professor at luxury research center HEC Paris.
Among neighboring countries such as Japan - which has an established luxury market - and China - which has huge potential - Korea is a market that has an immediate need for luxury marketing.
"(The country) is a place where many things are happening now. It is the time for us to deliver the principle of luxury marketing," he said.
"The luxury market in Japan is declining after reaching its peak in the 1990s. Korea is now enjoying a boom of luxury goods in the footsteps of the neighboring country," she said.
Reflecting the booming luxury market, Seoul Luxury Business Institute, the first education institute in Asia on premium business and marketing, is opening classes in the city next month.
Students will include college graduates who want to become managers or marketers for luxury companies in Korea and executives seeking new business opportunities in the premium market, the institute said.
Success of Sulwhasoo
Consumers` pursuit of luxury products has helped local firms create their own premium brands.
Amore Pacific, a Korean cosmetics company that launched the premium brand "Sulwhasoo" is one of a few examples of local companies targeting the world`s luxury market.
Starting with its flagship brand Amore Pacific, the company already entered markets in the United States in 2003 and Japan in 2006. The company has been very successful in gaining recognition from upper-class customers.
Last year, the company`s global sales reached 234 billion won ($178 million), a 34 percent increase from the previous year. It plans to launch the Sulwhasoo cosmetics at Bergdorf Goodman in New York, the world`s center for fashion and luxury goods, next year. "Sulhwasoo will represent premium Asian culture in the U.S. market as silk and china did for the image and culture of orient in the past," Kim Tae-youn, a publicity official of Amore Pacific, said.
"Dubbed Korean traditional medicine cosmetics, the brand will join the U.S. high-end market in the first half of the year 2010," she said.
The secret to Amore Pacific`s success was that it represents Korea`s heritage of beauty, Kapferer said.
"It is time for Asia to invent its own luxury plans by examining its culture and heritage," he said.
The marketing expert also added that Korean designers need to join hands with companies specializing in the luxury business.
"What is missing in Korea is a Korean LVMH, a company that has the ability to finance and manage the growth, and driven by the luxury discipline. Otherwise artists will remain just artists. They need partners or businessmen who can understand the art of luxury," he said.