Koreans warm to luxury items

Koreans are ignoring the current import clampdown in their quest for high-ticket items, such as cars and electrical goods. The market is there for Western marketers to exploit, says David Kilburn

With the recurring drama of North Korean defectors and warnings of a new war with the Stalinist North as a backdrop, Western businessmen are fighting their own trench warfare in South Korea. Their foes are the Korean customs, the bureaucracy and quite possibly the government itself.

Battle commenced when the government announced a “frugality campaign” to curb imports and alleviate a ballooning current account deficit. The government insists the initiative is not targeted specifically at imports but against all consumption of “luxury goods”.

In the luxury category, South Korea includes all electronic products, home appliances, cosmetics, leisure equipment, clothing and cars.

Be that as it may, the campaign includes pledges by conglomerates to stop importing consumer goods, plus restrictions on overseas spending and anti-import campaigns by associations such as the Korean Central Council of Nightspot Owners, whose banners proclaim: “Don’t Buy Imported Cigarettes and Whisky.”

And so it was St Patrick’s Day without Guinness at O’Kim’s, Seoul’s Irish pub, as customs officials blocked import of Guinness and other foreign beers for health reasons. In keeping with the times, Doosan, which imports Seagram whiskies suspended its ads until things calmed down – a politically correct decision though frustrating to Seagram’s marketing team. For Marks & Spencer, opening day for its new stores in Seoul was a cliffhanger as customs officials delayed clearing the imported merchandise until the last minute – even refusing to accept “Made in the EU” as an indicator of origin on labels.

“The country’s history of foreign domination has bred a defensive xenophobia among the Korean people,” says Political & Economic Risk Consultancy in a recent report. It adds that while South Korea welcomes foreign investment in hi-tech areas, “attitudes among the public and in the bureaucracy are an impediment to investment in other sectors, as well as to imports”.

All the more surprising then that, in contrast to the growing stockpiles of unsold Korean cars, sales of imported vehicles have risen this year.

Foreign car sales in the first quarter exceeded $112m (70m). Sources at the Korea Association of Automobile Imports say that a total of 952 cars were sold by 12 vehicle import agencies here in March alone, registering a lofty rise of 37.6 per cent over the previous month. The March advance also pushed up their sales for the first three months to 2,317 cars, up 9.3 per cent from the 2,119 last year.

Seoul observers believe this could be a sign that consumers are feeling confident enough to make their own purchasing decisions whatever the constraints.

Korean society now has plurality of values, perhaps for the first time. Particularly among young people, foreign travel and the consequent exposure to exotic ideas about how life and society can be ap-proached has cre- ated an interest in lifestyles which differ from the puritanical ideals of bureaucrats back home. This is the niche for foreign marketers – provided they have nerves of steel.

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