Fashion Sector in Korea

An Expert's View about Textiles, Apparel and Accessories in South Korea

Posted on: 8 Sep 2010

Latest overview of market potential for the Fashion Sector in Korea.

Fashion market ? South Korea Sector Report FASHION South Korea Produced by: Kyungah Lee, Trade Officer, British Embassy Seoul Last revised December 2009 Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Enterprise & Regulatory Reform, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Fashion & Clothing ? South Korea Table of Contents OVERVIEW 3 CHARACTERISTICS OF MARKET 3 OPPORTUNITIES 4 KEY METHODS OF DOING BUSINESS 6 MORE DETAILED SECTOR REPORTS 6 PUBLICATIONS 7 EVENTS 8 CONTACT LISTS 8 Page 2 of 9 Fashion & Clothing ? South Korea OVERVIEW The Korean fashion apparel market was valued at approximately £13 billion in 2008. A turning point came in 1997, when quotas were abolished and other barriers, including duties, were reduced. Since then, brand name apparel from European countries and the US has gained increasing prominence in the high-end market, and Korea has been recognised as a major centre for international fashion in Asia, along with Hong Kong and Japan. As Korea's affluence and discretionary spending has surged, so has Koreans' interest in international fashion brands. The market now moves quickly. Consumers tend to pursue different and unique styles and values. Almost all high fashion brands are represented in Korea, rating Korea as one of their most profitable markets. Mid-priced range imported fashion brands are also rapidly establishing a market presence and enjoying success. CHARACTERISTICS OF MARKET The Korean fashion market has evolved according to global fashion trends. Young designers? contemporary fashion brands are becoming popular amongst Korean working women. The number of select shops selling various foreign brands has increased rapidly over the past four or five years. A lot of local distributors, licensees and retailers are keen to import international fashion products from Italy, France, the US and the UK. Distribution channels have diversified, as demonstrated by various brand stores, flagship stores, traditional shopping districts and e-shopping malls. The Korean fashion industry has been hit by the effect of the global financial slowdown, like other markets. However, the Korean economy has recently shown Page 3 of 17 Fashion & Clothing ? South Korea positive signs of recovery, with a number of economic indicators improving. Large department stores keep expanding shopping space for imported apparel brands. Smaller department stores targeting middle-class consumers are also expanding; specialising in shops for imported goods. In fact, the country has seen a flood of popular foreign brands recently. Domestic fashion brands are on the brink of collapse against foreign brands? aggressive advancement into market place. Statistics of Export and Import for Apparel (excl. fashion accessories) (Unit: £ Billion) Export Changes (%) over Import Changes (%) over the previous year the previous year 2005 2.00 -17.9% 2.05 10% 2006 1.80 -10.1% 2.62 27.7% 2007 1.68 -6.4% 3.03 15.8% 2008 1.61 -4.1% 2.96 -2.3%* (Source: Korea International Trade Association) * The figure for 2008 was affected by the global economic downturn. Women's Apparel During the past couple of years, as their tastes have evolved, many Korean working women have shown diverse tastes in office attire, with their preferences shifting toward less formal, but gorgeous, sophisticated and professional look at work. Young designer?s brands and contemporary fashion brands are popular amongst Korean women. Since 2003, Marc Jacobs, CK Calvin Klein, Vannessa Bruno, Jill Stuart, SKNY, Theory, Sandro, Jadic et Voltaire, Bluemarine, Paul & Joe, See by Chloe have made inroad into the Korean market and now are enjoying good sales results in the Korean market. Men's Apparel Lately Korean male consumers have shown significant purchasing power on fashion goods. In particular, Korean young men have become fashion conscious in both their leisure and professional apparel needs, spurring a sharp increase in demand for imported casual wear and accessory brands. For Korean male consumers, wearing good brands is a way of showing off one?s social status and wealth. Kiton, Brioni, Ermenegildo Zena, Armani, Paul Smith are expanding market share in the high-end market. Demand for imported men?s casual brands is increasing amongst young consumers. Baby?s and Kid's Apparel The total size of the Korean market for children?s and baby wear was £780 million in 2008. Korean parents value high-end fashion and thus spend a lot on their children. The low birth rate in Korea (1.2 child per family) encourages high spending. As a result, foreign premium brands do well in Korea. Directly imported and licensed foreign brands such as Burberry Baby & Children, Ralph Lauren Baby & Children, Gap Baby & Kids, and Daks Kids are popular with Korean shoppers who like their quality Page 4 of 17 Fashion & Clothing ? South Korea and brand name. The result is that local department stores are now targeting new 'luxury and sophisticated' foreign brands to sell to high-income brackets and working professionals. Sportswear-Golf wear The Korean sports wear apparel market has also registered strong growth, especially sales of ski, water sports, hiking and golfing wear. In particular, Golf wear has shown the most significant increase in demand. Industry statistics indicate that this market has expanded by 30% annually during the last 4-5 years. There has also been a large increase in the number of Korean women golfers, with women's golf wear accounting for about 45% of the overall golf wear market. Many apparel companies have launched women's apparel lines. OPPORTUNITIES As the 13th largest economy in the world, South Korea?s population of close to 50 million offers tremendous opportunities for UK fashion companies. South Koreans have experienced incredible increases in personal income and spending power, which is concentrated but not exclusive to the Seoul Metropolitan Area. ?Greater Seoul? is one of Asia?s most important business hubs and home to almost half the country?s population. Middle and upper class consumers have leant toward overseas brands since 2003. Foreign brands take advantage over domestic ones in terms of both brand recognition and marketing. Luxury foreign brands have dominated the nation?s high-end market and are now moving in to the mass market. The demand for imported mid-priced fashion brands is also increasing in Korea; foreign companies are taking market share from previously dominant local companies. The so-called fast fashion market is growing rapidly in Korea as well. In particular, younger Korean consumers with fast- changing consumer tastes and who like lower-priced but trendy apparel, are willing to take up fast fashion of SPA (Speciality retailer of Private label Apparel) brands. The steady reduction in tariff barriers against imported fashion goods (Apparel 13%, Handbag 8%, Shoes 13%, Others 8% / VAT 10%), its evolving distribution system and diverse consumer tastes have opened the market to foreign including British fashion brands. The EU-Korea Free Trade Agreement (FTA)* was initialled in October 2009, and is expected to come into force in the second half of 2010. The effect of the FTA will be to eliminate tariffs on 97% of goods traded between the EU and Korea (within three years). The effect on the fashion sector is that the present duty levied on imported apparels will fall to zero when the FTA kicks in. Thus it will create a real "first to market" opportunity for UK and EU suppliers. * EU-Korea FTA The EU and South Korea finalised negotiations for a Free Trade Agreement (FTA) on 15th October 2009. The agreement could deliver up to Euros32billion of increased trade between the two territories. The FTA should boost the UK?s commercial relationship with South Korea. UK?s exports to South Korea increased in 2007 and 2008 by 2.3% and 1.6% respectively. The deal still needs to be ratified by the respective legislatures. Page 5 of 17 Fashion & Clothing ? South Korea KEY METHODS OF DOING BUSINESS Market entry The following market entry options are recommended for UK apparel companies; 1. Direct import ? high marketing positioning British suppliers who target the premium fashion market should have a capable exclusive sales agent/distributor who has an established network with key retailers and extensive market knowledge. A long-term perspective and reliable partnership between the supplier and sales agents is one of the key factors for success. 2. Brand licensing in Korea Many international brands are manufactured in Korea under license. DAKS is one example of the license brand that has been successfully marketed in Korea. For UK fashion companies interested in brand licensing for the Korean market, a trade mark registration is prerequisite. Also, if the UK brand owners want to keep a consistent international brand image in all export markets, they should give a local licensee clear direction on brand positioning, and should pay careful attention to the wording of the license agreement to avoid losing control over the brand. Distribution channel Distribution channels for imported apparel are diversifying into flagship stores, traditional shopping districts and direct sales. Speciality imported apparel shops are selling multiple brands at a cheaper price than department stores. These shops continue to the increase in popularity of imported apparel. - Department stores - Select shops of foreign brands - Discount stores - Traditional shopping districts - On-line shopping (TV & Internet) MORE DETAILED SECTOR REPORTS Research is critical when considering new markets. UKTI provides market research services which can help UK companies doing business overseas including: Page 6 of 17 Fashion & Clothing ? South Korea ? Overseas Market Introduction Service (OMIS). Bespoke research into potential markets, contacts and support during your visits overseas. ? Export Marketing Research Scheme. Advice on market research and help to contact subsidised market research administered by the British Chambers of Commerce on behalf of UKTI. Contact your local International Trade Advisor if you are interested in accessing these services, or for general advice in developing your export strategy. When considering doing business in South Korea, it is essential to obtain legal, financial and tax advice. A useful contact list of lawyers and other relevant professional bodies is available from the Embassy. For further details, please contact: Kyungah Lee Trade officer UKTI Seoul/British Embassy Seoul Taepyeongno 40 4 Jeongdong Jundgu Seoul 100-120 Republic of Korea Tel: 82-2-3210-5632 Fax: 82-2-736-6241 Email: PUBLICATIONS The Korea Textile News Tel: 822 326 3600 Fax: 822 326 2270 Add: 440-15 Seokyo-dong Mapo-ku Seoul Website: The Apparel News Tel: 822 2025 2200 Fax: 822 2025 2345 Add: Rm 505 Bucksan Digital Valley 212-13 Kuro-dong Kuro-ku Seoul Website: Fashionbiz Tel: 822 515 2235 Fax: 822 515 2745 Add: 6th Fl Knitter's Bldg 586-1 Shinsa-dong Kangnam-ku Seoul Website: Page 7 of 17 Fashion & Clothing ? South Korea EVENTS Exhibitions in Korea Seoul Fashion Week F/W 2010 Date: March 2010 Venue: SETEC Seoul International Sports & Leisure Industry Show 2010 Date : 11th-14th March 2010 Vanue : Coex, Seoul Korea International Jewelry & Watch 2010 Date : 29th April ? 2nd May, 2010 Vanue : COEX, Seoul Seoul Fashion Sourcing Fair Date: June, 2010 Venue: SETEC(Seoul Trade Exhibition & Convention Center) Seoul International Fair for Mother & Baby 2009 Date : August, 2010 Vanue : Coex, Seoul Seoul Fashion Week S/S 2011 Date: October 2010 Venue: SETEC Busan International Textile & Fashion Show 2008 Date : November 2010 Vanue : BEXCO,Busan CONTACT LISTS Industry contact & links Korea Fashion Association Mr. Hoo-suck Park E-mail: Add: 16th, textile center, 944-31, Daechidong. Gangnamgu Seoul, Korea Page 8 of 17 Fashion & Clothing ? South Korea Tel : 82 2 528 4744 Fax: 82 2 528 4750 Korea Federation of Textile Industries E-mail : Add: 16th, textile center, 944-31, Daechidong. Gangnamgu Seoul, Korea Tel : 82 2 528 4052 Fax: 82 2 528 4069 Korea Fashion Textile Association Mr. Young-kyu Lee Add: 311 Woosung livingtel 467-10, Dogokdong, Gangnamgu, Seoul Tel : 82 2 576 7247 Fax: 82 2 576 7230 Korea Textile Trade Association Mr. Soo-hoon Chae Add: 16th, textile center, 944-31, Daechidong. Gangnamgu Seoul, Korea Tel : 82 2 528 5156 Fax: 82 2 528 5154 Korea Importers Association Mr. Jaemu Lee Add: KOIMA biuilding, Hankangro 2 ka, Younsan-ku, Seoul, Korea E-mail : Tel : 82 2 792 1581 Fax : 82785 4373 Page 9 of 17
Posted: 08 September 2010

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