UNIVERSITÀ DEGLI STUDI DI TORINOSCHOOL OF MANAGEMENT AND

RETAIL MARKETING

STORE MANAGEMENT

FINAL DISSERTATION

FASHION BRANDS AND STAR SYSTEM MARKETING IN SOUTH KOREA:

“BORGO ITALIA

GIUSEPPE LA TORRE

PROF.SSA ANNA CLAUDIA PELLICELLI

UNIVERSITÀ DEGLI STUDI DI TORINOSCHOOL OF MANAGEMENT AND

ECONOMICS

MASTER RETAIL MARKETING

& STORE MANAGEMENT

2013/2014

FINAL DISSERTATION:

FASHION BRANDS AND STAR SYSTEM MARKETING IN SOUTH KOREA:

BORGO ITALIA” IN SEOUL

STUDENT: GIUSEPPE LA TORRE

SUPERVISOR:

PROF.SSA ANNA CLAUDIA PELLICELLI

UNIVERSITÀ DEGLI STUDI DI TORINO SCHOOL OF MANAGEMENT AND

FASHION BRANDS AND STAR SYSTEM MARKETING IN SOUTH KOREA:

IN SEOUL

PROF.SSA ANNA CLAUDIA PELLICELLI

1

INDEX:

Introduction: The Reason of My Internship in Seoul…………….Pag.2

1. South Korea, The Big Asian Power…………………………………………..Pag.5

1.1 General Information……………………………………………………………Pag.5

1.2 Korea in The International Community and FTAs…………..Pag.13

1.3 Culture and Tradition……………………………………..………………. Pag.20

1.4 Economic Development and Competitive Industries……..Pag.28

2. Apparel’s Market Analysis……………………………………………….……..Pag.37

2.1 Progress of Fashion’s Taste……………………………………………….Pag.37

2.2 Luxury Good Obsession…………………………………………………….Pag.45

2.3 Distribution Channels & Marketing Strategies……………….Pag.53

3. Korean Star System Marketing………………………………………………Pag.59

3.1 Korean Wave……………………………………………………………………..Pag.59

3.2 Celebrities Who Became Advertising………………………………Pag.64

3.3 How it affects The Brand's Knowledge…………………………….Pag.70

4. Fieldwork: The Case of “Borgo Italia”…………………………………….Pag.74

4.1 My work for Borgo Italia in South Korea………………………….Pag.74

4.2 Interviews to Korean Companies……………………………………..Pag.78

4.3 Potential Scenarios……………………………………………………………Pag.86

References……………………………………………………………………………….Pag.89

2

Introduction: Why I chose Seoul for my

Internship.

When I saw the Master in Retail Marketing & Store Management brochure, I

was excited. This course and the stories of previous students on their

internship abroad, motivated me to apply. After thinking long and hard about

it, I decided to start this hard path and go abroad to do my internship.

Originally, I moved from my hometown of Manfredonia in the south of Italy to

study International Political Relations at the University of Torino when I was

18. After 4 years in Torino, I wanted to challenge myself by gaining some work

experience far from Italy, whilst also having the opportunities to travel and

experience other culture unlike that of my own. After 6 months of studying

intensive courses in Management Accounting, Marketing IT and Human

Resource Management, I received a call from Borgo Italia. At this point, I

would like to thank my director Lucia Fanfani for this opportunity, as she was

the one who inspired me think about working in South Korea. At the

beginning it was weird, I knew I wanted to go abroad, but I only thought of

Europe. So I took some time to discuss it with my Master’s Director, Professor

Anna Claudia Pellicelli, as she spurred me to take this opportunity to grow up

abroad and gain experience. So after finishing my last class, I started to travel

around Firenze, Milano and Torino for a month to gain vital experience inside

the five Companies of Borgo Italia, which include Monnalisa, MiniConf,

Maglificio Beby, Antonio Meneghetti and Florence Collections. This

3

experience assisted me in understanding their products and each company

philosophy individually. Now, here I am, after living 6 months in Seoul, I am

now writing this thesis. I arrived here knowing almost nothing about Korean

culture, its language and having no connections in the city, but that did not

stop me. Armed with a positive mindset and willpower, I have learnt a lot in 6

months. I have worked hard to know and understand a new culture, to get the

most out of my experience abroad and to do my best whilst working for my

companies. My internship has now finished, but all that hard work and

enthusiasm has paid off. The companies that I have been working for have

already confirmed me for other 6 month between South Korea, Japan and

Singapore. In this Thesis I will explain the general aspects about South Korea,

to enable you to understand one of the most popular and exciting places in

Asia at the moment. I will then talk about apparel development, fashion trends

in Korea, marketing strategies and my suggestions on how to promote foreign

brands in South Korea. Finally, I will discuss what I did and what I will do for

Borgo Italia in Asia in the future. But before to start, I would like to say thanks

from the bottom of my heart to some people. First of all to my parents

Francesca e Michele, and my brother Matteo: They have always believed in

and motivated me in to achieving my dreams. To my Master’s Director, Anna

Claudia Pellicelli, and my Borgo Italia’s Director, Lucia Fanfani, for all their

help and assistance in making this all come true. Some very close and old

friends Marica, Oriana, Michela, Rossella, Sara, Francesco, Matteo, Simone,

Antonio for always being there for me, in the good and in the bad. My Master’s

friends Noemi, Sole, Linda, Roberto, Ennio with whom I shared a classroom

4

with for 6 months. And finally, to one of the most amazing persons I know,

who I admire and so proud of to have by my side here in Seoul, Almudena. My

girlfriend and my partner for many more adventures to come in the future.

Thank you from the bottom of my heart to all. This thesis is also yours.

And I dedicate it to you.

5

1 South Korea, the Big Asian Power

1.1 General Information

With the official name of Republic of Korea, this country includes a surface

area of 99 thousand square kilometers and a total population of almost 50.2

million as of 2014. Its capital, the well-known Seoul megalopolis, has nearly

48% of the population of the country, according to the Organization for

Economic Cooperation and Development (OECD). This figure makes Seoul

one of the largest urban agglomerations in the world well above New York,

Tokyo, London and Mexico City. Other economically important and advanced

cities of Korea include: Busan, Incheon, Daegu, Daejeon, Gwangju and Ulsan.

Researches show as well that Korea has the highest population density in the

OECD with 484 inhabitants per square kilometer.

Geographically, it is located in a strategic position at the center of air and

maritime transportation networks in Northeast Asia. In fact, this position

allows the Korean peninsula to be able to reach 51 cities, which have a

population of approximately 1 million people, within 3 hours flying from Seoul.

6

It has been proven that combining the population of Korea, Japan and China,

the result exceeds 1.53 billion and that it represents 22 % of the global

population.

The official language of the country is Korean. However, English is the most

common language of business and the number of people who consider English

as their second language has increased significantly over the past few years.

As far as religion is concerned, the most important ones are Buddhism,

Catholicism and Protestantism, Confucianism and Shamanism.

The climate of the country does not differ from that in Europe, which means

that it has a continental climate with four different seasons. Regarding the

time zone and taking Italy has the reference, the time difference would consist

of 7 hours that are to be added to the local time.

Korea´s official monetary unit is the Won. Currently, a dollar exchanges for

about 1,200 won but exchange rates may change at any time according to the

market conditions.

The country ranks at number fourteen on the list of the economies with the

largest domestic product in 2013, according to the database of the World Bank.

In fact, its nominal GDP is US$ 1.1975 trillion as for 2013.

Regarding the export figures, the nation recorded 145.7 billion dollars thanks

to the favorable trend in vessels, semiconductors and petroleum products. It is

important to highlight that Northeast Asia has placed itself among the three

main global economic powers, sharing this position with the United States and

Europe.

7

Although it was colonized by Japan in the early 20th century and had to go

through the Korean War until 1953, the country has accomplished one of its

hardest missions: establishing itself as one of the world´s strongest and most

competitive economies.

Korea has achieved amazing economic growth in a short period, dubbed "the

Miracle on the Han River”. Today, Korea is an industrial nation standing tall

on the world stage. Its semiconductor, automobile, shipbuilding, steel making,

and IT industries are on the leading edge in global markets. It hosted the 1988

Seoul Olympics and the 2002 FIFA World Cup Korea/Japan. More recently,

Korean dramas, movies, and music are attracting many audiences in Asian

countries and beyond, creating what is being called the "Korean Wave."

Korea's new standing in the international community was highlighted in 2010

with the nation becoming the first Asian country to chair the G20 and host the

G20 Seoul Summit.

Official name Republic of Korea

Area 99 thousand square kilometers

Capital Seoul

Population roughly 50.2 million

Official language Korean

Religions

Buddhism, Catholicism,

Protestantism, Confucianism and

Shamanism

Climate and Time Zone Continental climate (+ 7 hours as of

Italy)

Currency Won (KRW)

8

The Korean flag is called Taegeukgi. Its design symbolizes the principles of the

yin and yang in Asian philosophy. The circle in the centre of the flag is divided

into two equal parts. The upper red section represents the proactive cosmic

forces of the yang. Conversely, the lower blue section represents the

responsive cosmic forces of the yin. The two forces embody the concepts of

continual movement, balance, and harmony that characterize the sphere of

infinity. The circle is surrounded by four trigrams, one in each corner. Each

trigram symbolizes one of the four universal elements: heaven, earth, fire, and

water.

National flower Mugunghwa (Rose of Sharon)

9

Thanks to Hangeul, Korea has achieved a nearly 100% literacy rate. The

scientific and easy-to-write alphabet has also given the country an edge in the

computer age. All Koreans speak and write the same language, which has been

a decisive factor in forging their strong national identity. The words and

accent spoken by the people of the Seoul area are regarded as standard.

Among regional dialects, that of the people of Jejudo Island off the South Coast

is most distinct. Hangeul, which consists of ten vowels and 14 consonants, can

be combined to form numerous, syllabic groupings. It is simple yet systematic

and comprehensive, and is considered one of the most scientific writing

systems in the world. Hangeul is easy to learn and write, which has greatly

contributed to Korea's high literacy rate and advanced publication industry.

10

In the 19th century, Korea remained a "Hermit Kingdom," adamantly opposed

to Western demands for diplomatic and trade relations. Over time, a few Asian

and European countries with imperialistic ambitions competed with each

other for influence over the Korean Peninsula. Japan, after winning wars

against China and Russia, forcibly annexed Korea and instituted colonial rule

in 1909. The colonization process stimulated the patriotism of Koreans. Korean

intellectuals were infuriated by Japan's cultural assimilation policy, which even

banned Korean-language education in schools. On March 1, 1919, a peaceful

demonstration demanding independence spread nationwide. The Japanese

authorities ruthlessly repressed the demonstrators and their supporters, and

massacred thousands. Although it failed, the March 1 Independence

Movement created strong bonds of national identity and patriotism among

Koreans. The movement led to the establishment of a Provisional Government

in Shanghai, China, as well as an organized armed struggle against the

Japanese colonists in Manchuria. The Independence Movement is

commemorated in Korea every March 1. During the colonial period, Japan's

economic exploitation of Korea continued. The lives of Koreans deteriorated

under colonial rule until the end of World War II in 1945.Koreans rejoiced at

Japan's World War II defeat. However, their joy was short-lived. Liberation did

not instantly bring about the independence for which the Koreans had fought

so fiercely. Rather, it resulted in a country divided by ideological differences

caused by the emerging Cold War. Korean efforts to establish an independent

government were frustrating as U.S. forces occupied the southern half of the

peninsula and Soviet troops took control of the north. In November 1947, the

11

United Nations General Assembly adopted a resolution that called for general

elections in Korea under the supervision of a UN Commission. However, the

Soviet Union refused to comply with the resolution and denied the UN

Commission's access to the northern half of Korea. The UN General Assembly

then adopted another resolution calling for elections in areas accessible to its

commission. The first elections in Korea were carried out on May 10, 1948, in

the areas south of the 38th parallel. This artificial line came to divide the

Korean Peninsula into South and North. Syngman Rhee, a U.S. educated

intellectual and former independence fighter, was elected the first President of

the Republic of Korea in 1948. Rhee's foresight was instrumental in

establishing a separate government in South Korea, laying the groundwork for

a democracy and a market economy. Meanwhile, a communist regime was set

up north of the 38th parallel under the leadership of Kim Il-sung with Soviet

support. On June 25, 1950, North Korea launched an unprovoked full-scale

invasion of the South, triggering a three-year war which drew in U.S., Chinese,

and other foreign forces. The entire peninsula was devastated by the conflict.

A ceasefire was signed in July 1953.Despite his historic contribution, Rhee was

ousted from power in 1960 by student demonstrations protesting his

protracted rule and election frauds. Korea's growth-oriented, export-led

economic development since the 1960s under the leadership of Park Chung-

hee, the general-turned-president, development of Korea was so remarkable

that it earned the name "the Miracle on the Han River". Following 18 years of

authoritarian rule, however, Park was assassinated in 1979. Subsequently,

South Korea was ruled by Chun Doo-hwan, another general-turned-president

12

until direct presidential elections were restored in 1987, which saw the election

of another former general, Roh Tae-woo. Seoul hosted the Olympics in 1988

and Korea co-hosted the 2002 FIFA World Cup soccer games with Japan.

Through expanding international trade and exchange, Korea has demonstrated

to the world its rich cultural heritage as well as modern technology. In the

1950s, Korea ranked among the poorest countries. Today, its economy is the

13th to 14th largest in the world, and the nation is poised to become an active

player on the global economic stage following the hosting of the G20 Summit

in 2010.On December 19, 2012, Park Geun-hye was elected the 18th president of

South Korea, becoming the first female president in Korean history. President

Park Geun-hye was inaugurated on February 25 2013, with a paradigm for a new

era: the happiness of the people and national development. Since 1948 when

the government of the Republic of Korea was established, Korea has been able

to transform itself from one of the world’s poorest nations into one of the

world’s richest. Over this 65-year span, faster than ever before in human

history, Korea has armed itself with a liberal democracy and an open economy.

It can be truly said to have achieved a miracle. The Republic of Korea has

steadily followed the path to mature democracy and economic prosperity.

Even though the legacies of the Cold War still linger on this peninsula and

global economic crises have affected it, South Korea has been demonstrating

remarkable resilience in coping with these challenges and looks forward to an

even brighter future.

13

1.2 Korea in the International Community and FTAs

The Republic of Korea, founded in 1948, upholds the values of democracy and

free-market economy. The Cold War confrontation that emerged in the

aftermath of World War II divided the world into two antagonistic blocs, and

the Republic of Korea aligned itself with the democracies of the West. As the

Cold War intensified, the Republic of Korea focused on further cementing ties

with its traditional allies and building cooperative relations with Third World

nations. Since the 1970s, South Korean diplomacy has been aimed at

promoting the peaceful reunification of the peninsula. To this end, South

Korea has bolstered ties with allies and played an active role in the

international arena. Having laid a firm basis for its diplomacy, the Republic of

Korea continued throughout the 1980’s to forge cooperative partnerships with

various nations in a wide array of fields. In the late 1980’s and early 1990’s, the

Republic of Korea responded swiftly to the epochal changes in Eastern Europe

and in the former Soviet Union, changes which effectively brought an end to

the Cold War by actively pursuing the so-called "Northern Diplomacy". This

led to the establishment of diplomatic relations with former Communist Bloc

countries. South Korea's normalization of relations with these countries,

including the Soviet Union and China, brought a truly global aspect to its

diplomacy. However, the crowning achievement of the Northern Diplomacy

occurred in September 1991 when South and North Korea simultaneously

joined the United Nations. The signing by South and North Korea of the

Agreement on Reconciliation, Nonaggression and Exchanges and Cooperation

14

(the South-North Basic Agreement) and the Joint Declaration of the

Denuclearization of the Korean Peninsula in December 1991 was designed to

pave the way for peaceful coexistence and prosperity of the two Koreas. The

end of the Cold War ushered in a new trend in the form of regionalism.

Countries which pursued export-led growth such as the Republic of Korea

found themselves facing a new international economic environment. Korea's

export-led growth has been largely dependent on trade with advanced

countries such as the United States, Japan and the European Union. This

situation has often led to frictions over trade imbalances. However, Korea's

reliance on trade with advanced countries has steadily declined as trade with

developing countries has increased. As its economy shifts from labor-intensive

to technology-intensive industries, South Korea is expected to expand its trade

with developing countries and the nations of Eastern Europe, given the

growing complementariness of their economies, thus making a greater

contribution to the development of the global economy. With industrialized

countries that remain crucial as partners not only in trade but also in the area

of science and technology, Korea will endeavour to minimize friction through

the reciprocal opening of its industrial, agricultural, and service sectors. The

Republic of Korea is committed to global trade liberalization, and is an active

participant in the Doha Development Agenda1 negotiations launched in

2001.As of March 2012, South Korea had effectuated a total of eight FTAs2 with

45 countries, including the United States, Chile, Singapore, EFTA, ASEAN, 1The Doha Round of world trade negotiations was launched in Doha, Qatar in November 2001. Named the Doha

Development Agenda, this round of trade negotiations is targeted at further liberalizing trade, whilst facilitating the integration of developing countries, particularly Least Developed Countries (LDCs) into the WTO multilateral system 2A free-trade area is the region encompassing a trade bloc whose member countries have signed a free-trade

agreement (FTA).Free trade agreements eliminate tariffs, import quotas, and preferences on most (if not all) goods and services traded between the member countries.

15

India, the EU, and Peru. The country has also signed FTAs with Turkey and

Columbia and these are waiting for effectuation. The country is currently

engaged in FTA-related negotiations with Australia, New Zealand, Canada,

GCC, and Mexico. The country aims to contribute to regional integration

within East Asia through FTAs with China and Japan. Since the Republic of

Korea joined the United Nations in 1991, it has played an ever more active role

in the efforts to address a whole range of global issues, acting both as a

regional facilitator and an influential international actor. In 1996-1997, Korea

served as a non-permanent member of the Security Council. During this

period, it played an important role in advocating the protection of civilians

caught up in armed conflicts. Korea held the Presidency of the 56th Session of

the General Assembly in 2001, and in 2006, former Korean Foreign Minister

Ban Ki-moon was elected the 8th Secretary-General of the United Nations.

"My heart is overflowing with gratitude toward my country and people who have

sent me here to serve. It has been a long journey from my youth in war-torn and

destitute Korea to this rostrum and these awesome responsibilities. I could make

the journey because the UN was with my people in our darkest days. It gave us

hope and sustenance, security and dignity. It showed us a better way. So I feel at

home today, however many miles and years I have travelled".

Peacekeeping operations have emerged as a vital and powerful means for the

UN to help countries torn apart by armed conflict. Fully aware of the

importance of international peace and security in light of its own experience of

post-war nation-building, Korea has actively participated in UN peacekeeping

16

operations in 11 missions including those in Lebanon and Haiti as well as in

cease-fire monitoring and confidence-building efforts. Korea has also

contributed to initiatives to assist local communities attempts to recover

through the provision of medical services and assistance with local

construction projects. As a strong advocate of human rights, Korea upholds

the universal values of human rights as a centrepiece of its policy goals. Korea,

which has been a member of the Human Rights Council since its

establishment in June 2006, has actively engaged in the activities of the

Council, cooperating with the international community in advancing human

rights and responding to serious human rights situations in a timely and

efficient manner. Furthermore, as a state party to seven core international

human rights conventions, Korea is fully committed to the efforts of the

international community to promote and protect human rights. Moreover,

firmly committed to promoting democracy, Korea has actively participated in

various initiatives at the global and regional levels, including the Community

of Democracies, the Bali Democracy Forum, and the Asia-Pacific Democracy

Partnership. Korea has also been an active player in global efforts to

strengthen the disarmament and non-proliferation regimes. The annual

international conference co-hosted by Korea and the UN Office for

Disarmament Affairs since 2002, the so-called "Jeju Process," has provided a

meaningful platform for promoting discussions on various themes in the field

of disarmament and non-proliferation. Korea's joining the Proliferation

Security Initiative (PSI)3 in May 2009 stands as another manifestation of its

3The Proliferation Security Initiative (PSI) is a global effort that aims to stop trafficking of weapons of mass

17

willingness to take part in the global efforts to prevent the proliferation of

weapons of mass destruction and their means of delivery. Korea has

participated in PSI activities and events since then and will continue to

contribute to strengthening the PSI counter-proliferation networks. As part of

efforts to contribute to reconciliation and cooperation at the global level,

Korea has fully committed itself to cultural exchanges with foreign countries.

In order to deepen awareness and understanding of Korean art and culture

abroad, the Korea Foundation, established in 1991, supports overseas Korean

Studies programs as well as numerous academic conferences and a vast array

of international cultural programs. Since the G20 was launched in November

2008 in the midst of the unprecedented global financial and economic crisis,

Korea has played an active part in it and supported its role as the premier

forum for international economic cooperation. President Lee suggested the

lifting of trade and investment restrictions to prevent the rise of protectionism,

which was agreed at the Washington Summit and reaffirmed at the London

Summit in April 2009. Having weathered the Asian financial crisis in the late

1990s, Korea helped provide the direction in which the G20 should move to

prevent a recurrence of such crises in the future. As a result, Seoul was chosen

as the host city for the G20 Summit in November 2010, which reflects the

international community's recognition of Korea's efforts and global leadership.

From 1945 until the early 1990s, Korea received various forms of development

assistance from the international community. This assistance served as a

valuable resource in terms of Korea's phenomenal economic development. As

destruction (WMD), their delivery systems, and related materials to and from states and non-state actors of proliferation concern.

18

part of the efforts to contribute to the international community, Korea

attaches great importance to development cooperation. In particular, Korea is

striving to help meet the Millennium Development Goals (MDGs)4 set by

the United Nations, and to this end, is planning to gradually expand its

Official Development Assistance (ODA)5. In 2011, Korea provided a total of

US$1,324 million worth of ODA; and plans are currently in the works to expand

this amount to 0.25% of its Gross National Income (GNI)6 by 2015. Moreover,

Korea successfully joined the Organization for Economic Cooperation and

Development (OECD)’s7Development Assistance Committee (DAC)8 in

2009 and started its activities on January 1, 2010.

4The Millennium Development Goals (MDGs) are eight international development goals that were established

following the Millennium Summit of the United Nations in 2000, following the adoption of the United Nations Millennium Declaration. 5Official development assistance (ODA) is a term coined by the Development Assistance Committee (DAC) of

the Organisation for Economic Co-operation and Development(OECD) to measure aid. The DAC first used the term in 1969. It is widely used as an indicator of international aid flow. 6The Gross national income (GNI) is the total domestic and foreign output claimed by residents of a country,

consisting of gross domestic product (GDP) plus factor incomes earned by foreign residents, minus income earned in the domestic economy by non-residents. 7The Organisation for Economic Co-operation and Development (OECD) is an international economic organisation of

34 countries founded in 1961 to stimulate economic progress and world trade. It is a forum of countries committed to democracy and the market economy, providing a platform to compare policy experiences, seeking answers to common problems, identify good practices and coordinate domestic and international policies of its members. 8The Organisation for Economic Co-operation and Development's (OECD) Development Assistance

Committee (DAC) is a forum to discuss issues surrounding aid, development and poverty reduction in developing countries. It describes itself as being the "venue and voice" of the world's major donor countries.

19

The Republic of Korea government has pledged it will contribute to the

promotion and protection of universal values regarding international peace

and human rights in a manner that reflects its economic size and global

standing as a responsible member of the international community. To this end,

the Republic of Korea will actively participate in UN peacekeeping operations,

and expand Official Development Assistance.

20

1.3 Culture and Tradition

It is generally believed that Palaeolithic man began to inhabit the Korean

Peninsula about 40,000 to 50,000 years ago. Neolithic man appeared in Korea

around 4,000 B.C., with signs of their active presence around 3,000 B.C. being

found across the peninsula. It is believed that these Neolithic people formed

the ethnic stock of the Korean people. Neolithic people dwelled near the

seashore and riverbanks before advancing into inland areas. The sea was their

main source of food. They used nets, hooks and fishing lines to catch fish and

gather shellfish. Hunting was another way to procure food. Arrowheads and

spear points have been found at Neolithic sites. Later, they began to engage in

farming using stone hoes, sickles and millstones. Rice cultivation started

during the Bronze Age, which lasted in Korea until around 400 B.C. People

also lived in thatch-covered pits, while dolmen and stone cist tombs were used

predominantly for burials during the period. As agriculture became a principal

activity, villages were formed and a ruling leader with supreme authority

emerged. Law became necessary to govern the communities. In Gojoseon

(2,333 B.C.-108 B.C.), a law code consisting of eight articles came into practice,

but only three of the articles are known today: First, anybody who kills another

shall immediately be killed. Second, those who injure another's body shall

compensate in grain. Third, those who steal another's possessions shall

become a slave of their victim. Because of rapid changes in lifestyles in the last

few decades, the care of infants varies widely, depending, among other things,

21

on the class positions of a family. Generally, during the first two years children

receive great deal of affection, indulgence, and nurturing from their parents.

Infants seldom are separated from their mothers. They used to be carried on

the mother's back but today may ride in baby carriages. Many parents sleep

with their infants in the same room. Infant care practices encourage emotional

dependence of the children on their parents.

Obedience, cooperation, respect for the elders, and filial piety are the major

values inculcated in a child's early years. Most children receive traditional

gender role socialization from early childhood. Parents go to great lengths to

provide the best education for their children, especially their sons, since

parents traditionally have depended on their children in old age. Children,

particularly sons, maintain a strong sense of dependence on their parents

throughout adolescence and until after marriage. The differential treatment

sons and daughters receive from their parents is considered a fundamental

source of the gender structure in Korean society, where women are likely to be

more self-reliant and individualistic than menthe traditional high regard for

education as a means to improve one's socioeconomic status continues in

contemporary Korea. The annual college entrance examinations are extremely

competitive. Many unsuccessful applicants repeat the examinations in order to

enter elite universities. From only nineteen institutions of higher education in

1945, the number has increased to nine hundred fifty. Over 26 percent of men

and about 13 percent of women age twenty-five and over received higher

education as of 1995. Koreans are very status conscious, and their speech

behaviour reflects the hierarchical relationship between social actors. Except

22

among former classmates and other very close friends, adults do not use first

names to address each other. Position titles such as "professor," "manager,"

"director," and "president" are used in combination with the suffixing to

address a social superior. Koreans are generally courteous to the extent of

being ceremonious when they interact with social superiors but can be very

outgoing and friendly among friends and acquaintances of equal social status.

Their behaviour with strangers in urban public situations may be

characterized by indifference and self-centeredness. Koreans appear to be rude

to strangers since they generally do not say a word when they accidentally

push or jostle other people on the streets, and in the stores, train stations, and

airports. Traditional Confucian teaching emphasized propriety in the five sets

of human relationships, which included the relations between sovereign and

subject, father and son, husband and wife, senior and junior, and friend and

friend. Confucianism still serves as the standard of moral and social conduct

for many people. Family background and educational level are important

considerations in matchmaking. Marriage between people with a common

surname and origin place (Tongsong Tongbon) was prohibited by law until

1997. Many urbanites find their spouse at schools or workplaces and have a

love marriage. Others may find partners through arranged meetings made by

parents, relatives, friends, and professional matchmakers. In urban centres,

the arranged meeting often takes place in a hotel coffee shop where the man,

the woman, and their parents may meet for the first time. After exchanging

greetings and some conversation, the parents leave so that the couple can talk

and decide whether they would like to see each other again. Most individuals

23

have freedom in choosing a marital partner. Marriage has been regarded as a

rite of passage that confers a social status of adulthood on an individual.

Marriage also is thought of as a union of not just a man and a woman but of

their families and a means to ensure the continuity of the husband's family

line. Gender and age have been the two fundamental influences in patterns of

social organization. Housework is most commonly regarded as women's work

even when a woman works outside the home. Industrialization and

democratization have given women more opportunities to play diverse roles in

public life, but the basic structure of a gender division of labour is observable

in public life.

Hanok, Korean traditional houses, remained relatively unchanged from the

Three Kingdoms period through the late Joseon Dynasty (1392-1910). Ondol, a

Korean under-floor heating system, was first used in the north. Smoke and

heat generated from the low-lying kitchen stoves were channeled through

flues built under floors. In the warmer south, Ondol was used together with

wooden floors. The major materials of traditional houses were clay and wood.

Giwa, or black-grooved roof tiles, were made of earth, usually red clay. Today,

the Presidential mansion is called Cheong Wa Dae, or the Blue House, for the

blue tiles used for its roof.

24

Ondol: In modern usage it refers to any type of under-floor heating or a room

that follows the traditional way of eating and sleeping on the floor.

Hanok were built without using any nails and were assembled with wooden

pegs. Upper-class houses consisted of a number of separate structures, one for

the accommodation of women and children, one for the men of the family and

their guests, and another for servants, all enclosed within a wall. A family

ancestral shrine was built behind the house. A lotus pond was sometimes

created in front of the house outside the wall. The form of the houses differed

from the colder north to the warmer south. Simple houses with a rectangular

floor and a kitchen and a room on either side developed into an L-shaped

house in the south. Hanok later became U- or square-shaped centred on a

courtyard. From the late 1960’s, Korea's housing pattern began to change

rapidly with the construction of Western-style apartment buildings. High-rise

apartments have mushroomed all over the country since the 1970s but the

Ondol system has remained popular with heated water pipes taking the place

of smoke flues under the floor.

25

Koreans weaved cloth with hemp and arrowroot and raised silkworms to

produce silk. During the Three Kingdoms period, men wore jeogori (jacket),

baji (trousers), and durumagi (overcoat) with a hat, belt and pair of shoes. The

women wore jeogori (short jacket) with two long ribbons tied to form an

otgoreum (knot), a full length, high-waist wrap-around skirt called chima, a

durumagi, beoseon (white cotton socks), and boat-shaped shoes. This attire,

known as Hanbok, has been handed down in the same form for men and

women for hundreds of years with little change except for the length of the

jeogori and chima. Western-style clothes were commercialized in Korea

following the Korean War (1950-53), and during the rapid industrialization in

the 1960s and 1970s, Hanbok use declined, being regarded as inappropriate for

casual wear. Recently, however, Hanbok lovers have been campaigning to

revitalize Hanbok and have updated styles to better fit modern work

environments. Koreans still wear Hanbok but only on special holidays like

Seollal and Chuseok and family festivities such as Hwangap, the celebration for

parents turning 60

.

26

The creations of fashion designer Lee Young-hee (left). Lie Sang Bong introduced

“Han-geul fashion” in his fashion show. (right)

Rice still remains the staple of most Koreans, but among the younger

generations, many prefer Western-style food. Rice has been usually

accompanied by various side dishes, mostly seasoned vegetables, soup, pot

stew and meat. A Korean traditional meal is not complete without Kimchi, a

mixture of various pickled vegetables such as Chinese cabbage, radish, green

onion and cucumber. Certain types of Kimchi are made spicy with the addition

of red chili pepper powder, while others are prepared without red chili peppers

or are soaked in a tasty liquid. However, garlic is always used in Kimchi to add

to its flavour.

Traditional full-course dinner

In late November or early December, Korean families used to prepare enough

Kimchi to last the long winter. The Kimchi was stored in large clay jars

partially buried to maintain temperature and retain flavour. In modern Korea,

housewives often don't have time to make Kimchi or the outdoor space needed

to store large amounts. But Kimchi is still a vital part of the Korean lifestyle:

27

companies making the fermented dish and others selling special Kimchi

refrigerators enjoy brisk sales. In addition to Kimchi, Doenjang, with its anti-

cancer attributes, has attracted the attention of modern-day nutritionists.

Koreans used to make Doenjang at home by boiling yellow beans, drying them

in the shade, soaking them in salty water, and fermenting them in sunlight.

However, only a few families go through this process anymore; the majority

buys factory-made Doenjang. Among meat dishes, seasoned bulgogi (usually

beef) and galbi (beef or pork ribs) are the most favoured by both Koreans and

foreigners. Korean traditional liquor is made by fermenting various grains. The

fermentation process is a crucial part of the entire liquor making process for it

decides the scent and taste of the final product. Depending on the weather and

region it is produced, traditional liquors vary greatly. Fruits and herbs can also

be added in order to enhance taste. There are Makgeolli (Traditional Rice

Wine), Soju (Korea's most well-known distilled liquor), and Gwasilju (Fruit

Wine).

28

1.4 Economic Development

On the basis of Korea's recovery from the global financial crisis, the

government has been continuously making efforts to strengthen the

groundwork for long- term growth and boost the real economy. The

government is managing macroeconomic policies in a flexible manner so that

the economic recovery can be maintained. It is also taking steps to prevent the

recurrence of a crisis through monitoring of domestic and foreign causes of

anxiety, while strengthening its effort to prepare for possible risks from

households, businesses, the financial market and the foreign exchange market,

so that the economy will not be affected by external shocks.

“Miracle on the Han River” refers to the miraculous economic growth that has

transformed South Korea from the ashes of the Korean War.

29

With employment below the pre-crisis level, the government has pushed for

job creation with fiscal projects and its own employment assistance programs,

and by launching a service sector development plan, in order to generate long-

term as well as short-term jobs. The government has also stepped up efforts to

support lower income classes with policies designed to stabilize prices, provide

affordable housing, vitalize microcredit loans, and secure the livelihood of

vulnerable groups. Thanks to the government's successful policies, the Korean

economy posted a growth rate of 6.2 percent in 2010, its highest mark in eight

years, and per capita income returned to the US$20,000 level. Domestic

demand has led the growth while private consumption and facility investment

have posted excellent figures. Exports have increased in line with a rise in

overseas demand amid the global economic recovery and backed by increased

competitiveness of Korean products. Korea has leapt ahead to become world's

No. 8 exporting nation in 2012 and achieved a trade surplus of over US$25

billion for the fourth year in a row. As a result of government efforts to create

jobs, 323,000 jobs have been created, led by the private sector, with a rise in

the portion of full-time jobs and subsequent improvement in the quality of

jobs.

30

In addition, Korea successfully hosted the G20 summit in 2010, boosting the

country's image. The summit marked the first time for a non-G8 or Asian

country to host the conference, and Korea played a key role as the chair of the

summit, proposing the "Korea Initiative" and contributing to the substantial

agreements. The summit showed Korea's diplomatic ability and leadership as

it served as a bridge between advanced and developing countries, and played a

leading role in the creation of a new international order. In 2011, as the world's

9th largest economy, South Korea has emerged as a success story in many

ways. In 2011, Korea's trade volume amounted to US$1,080 billion, ranking the

country the 8th largest exporter in the world. Korea ranks the world sixth in

terms of foreign reserves. Much like other countries, the Korean economy has

also been affected by the global economic downturn. Although the won lost

nearly one-third of its value in 2008, the Director of the IMF9's Regional Office

for Asia and the Pacific has predicted that Korea would recover quickly due to

its improved economic fundamentals. Sustaining Korea's economic growth are

9The International Monetary Fund (IMF) is an international organization that was initiated in 1944 at the Bretton

Woods Conference and formally created in 1945 by 29 member countries. The IMF's stated goal was to assist in the reconstruction of the world's international payment system post–World War II.

31

key industries that have garnered recognition in the global arena. Korea is the

world's leading producer of displays and memory semiconductors. Also, it is

the second-largest shipbuilding nation in the world. Meanwhile, it ranks

second in terms of mobile phones, and fifth and sixth in automobiles and steel,

respectively. Korea's shipbuilding sector continues to be the industry leader,

ranking second globally in terms of vessel tonnage built, new orders and order

backlogs. Korea's shipbuilding sector currently accounts for about 34% of the

world's total shipbuilding orders. As a major auto manufacturer, Korea

produces over 4.2 million vehicles annually. Since Korea first started exporting

cars in 1976, the nation's auto industry has developed at a remarkable speed.

Riding on the increased popularity of Korean automobiles all over the world,

leading Korean car companies have begun extending manufacturing bases to

overseas locations. With almost 13% of the global market share, Korea's

semiconductor sector is at the forefront of the industry, particularly in terms

of flash memory and DRAM (Dynamic Random Access Memory). Korea's two

leading semiconductor manufacturers, Samsung Electronics and Hynix,

ranked 1st and 2nd in the world in the memory semiconductor sector in 2010.

All told, the two giants accounted for almost 50% of the global market.

32

Looking back, the direction of Korea's industrial policy changed significantly

every decade or so, helping to drive the economy toward a brighter and more

prosperous future. From the early 1960’s, Korea started to promote exports by

enacting relevant laws and regulations and establishing export-oriented

development plans. The heavy chemical industry was the centre of the nation's

industrial policy in the 1970’s and there was industrial restructuring in the

1980’s. The restructuring was aimed at promoting small and medium-sized

enterprises. Market opening and liberalization marked the 1990’s. When the

Asian financial crisis hit in 1997, Korea took on bold reforms to bring about a

speedy recovery. Korean businesses took the initiative to increase transparency

and meet global standards while policies to facilitate start-ups were put into

place. Since 2000, innovation has topped the national agenda. To bring about

33

more innovation, Korea is promoting business-friendly policies as well as

policies enhancing cooperation between large companies and SME10.

Korea's main emphasis is concentrated on stimulating the nation's growth

engines and upgrading its industrial structure. To do so, Korea aims to further

develop its component sector and knowledge-based service sector. Having

reached successful free trade agreements with the U.S., and the EU, Korea now

hopes to explore other mutually beneficial pacts with other trading partners.

To reinvigorate the development of advanced science and technology, the

government established the Korea Institute of Science and Technology (KIST)

and the Ministry of Science and Technology (MOST) in 1966 and 1967,

respectively. Based on the belief that the country's future lies in the cultivation

of human resources and the promotion of science and technology, the

government launched the Ministry of Education, Science and Technology

(MEST) on February 29, 2008.The new government inaugurated in 2013

10

European Monetary System (EMS) was an arrangement established in 1979 under the Jenkins European

Commission where most nations of the European Economic Community (EEC) linked their currencies to prevent large fluctuations relative to one another.

34

adopted the term creative economy, which refers to the creation of a new

industry by integrating diverse science-related sectors with existing industrial

sectors. The new government launched the Ministry of Science, ICT and

Future Planning, which is in charge of affairs related to R&D and

information/communication technology (ICT) in March 2013, to promote

concentrated investment in, and the development of, science and technology.

The newly launched ministry aims to integrate science and technology in

general and ICT; to establish, coordinate, and evaluate policies related to

science and technology; and to conduct R&D in science and technology, and

promote the relevant activities, including the training of talented people.

The National Science & Technology Commission (NSTC) was launched in

April of 2011, and is in charge of establishing the National Science

&Technology Basic Plan and coordinating and connecting trans-governmental

science & technology policies based upon the plan. Initially, South Korea's

national science and technology policies focused mainly on the introduction,

absorption, and application of foreign technologies. In the 1980’s, however,

35

emphasis shifted to the planning and conducting of national R&D projects to

raise the level of scientific and technological skills. This included programs to

increase both public and private sector R&D investment and to nurture highly

skilled R&D manpower. Since the early 1990s, the government has been

concentrating on three areas: fostering research in the basic sciences, securing

an efficient distribution and use of R&D resources, and expanding

international cooperation. These efforts are intended to increase Korea's

technological competitiveness. In 2010, Korea’s total R&D investment reached

US$37.9 billion, which accounted for 3.74% of GDP. South Korea will continue

to strengthen its involvement in global issues such as the preservation of the

environment and a stable supply of food, energy, and health care. South Korea

is a leader in the area of information and communications technology. This is

demonstrated by its vast ICT-related production and exports, world-class

technology, and the wide use of Internet and mobile communication devices

in the country. ICT industry-related products, such as computer chips and

mobile phones, account for over 33% of Korea's total exports. As for

communications services, nearly every Korean owns at least one mobile phone.

Moreover, almost every household has a broadband connection. All sectors of

industry from the food-service industry to public transportation are heavily

dependent on computers and ICT. Today, Korean semiconductors, mobile

handsets, TFT-LCDs and other items have become the most coveted in the

global market because of their high quality.

36

When looking at ICT-related statistics and changes that occurred in Korean

society between 2001 and 2010, the number of broadband Internet subscribers

increased from 7.81 million to 17.22 million, while the number of Internet users

also increased from 24.38 million to 37.01 million. The e-commerce turnovers

also showed growth between 2001 and 2010, from 108.9 trillion won (US$84.4

billion dollars) to 746.3 trillion (US$645.5 billion dollars).

37

2 Apparel’s Market Analysis

2.1 Progress of Fashion’s Taste

If you really want to know about the latest fashion trend in South Korea, you

have to go in Seoul, of course, but to be exactly in the most famous area:

Gangnam. Any explanation of Gangnam must start with the fact that it is not

so much a place, as much as it is an inspirational concept for many South

Koreans. It is a symbol for an entire lifestyle, a developmental dream come

true for a country that was basically no different from Afghanistan today,

when the Korean War ended in 1953. As part of his explanation of a very South

Korean piece of culture for American audiences, PSY has called Gangnam, "the

Korean Beverly Hills," which is both a useful and inaccurate analogy. The fact

is, that for Americans, Beverly Hills is simply a famous (or perhaps infamous),

wealthy neighbourhood in L.A., and not much more than a site of cultural

spectacle. It is merely one of many cultural symbols of conspicuous

consumption and a certain kind of wealth. But, one has to remember that,

unlike the United States, South Korea is a recently developed country that, on

the ground and for most people, isn't more than a single generation removed

from the farm. In development-obsessed South Korea, this fact has been

forgotten by many, and even for those who have not, it has become an

inconvenient historical truth.

Household consumption levels are largely determined by household income

and loans (leverage). Household income, a key source of cash flow, is strongly

38

correlated with GDP growth. As the Korean economy is believed to have

entered a sustained low-growth period (medium- to long- term GDP growth of

around 3-4%), household income is unlikely to show meaningful growth going

forward. Price resistance is the first thing retailers need to overcome when

they try to get consumers to buy amid shrinking consumption. With regard to

discretionary goods such as apparel, design, trends, and quality can also be

important considerations for consumers. In a low-growth environment, the

SPA11 model seems to best satisfy consumer needs in the apparel market. SPAs

rely on strong vertical integration—developing designs, manufacturing and

pricing goods, and selling them via their own distribution channels. This

model has allowed SPAs to provide quality products at reasonable prices via

innovative processes. The SPA model is advantageous for fashion retailers not

only in pricing but also in capturing and leading new trends. SPAs market

globally and analyse and quickly reflect the latest trends. Their ability to

rapidly manufacture items at affordable prices encourages consumers to shop

frequently--giving rise to the term “fast fashion.” Thanks to SPAs, consumers

can buy cheap, chic, and quality products. The Korean apparel market has

experienced tremendous transformation since SPA brands started to gain

ground after the 2008 global financial crisis. Previously, the market was

divided into high- end and low-end segments. As the financial crisis spread,

production and consumption tanked, and apparel spending nosedived as a

result. However, depressed consumption actually created the perfect

environment for SPAs in Korea. SPA brands offered trendy, quality goods at

11

The SPA (Specialty store retailer of Private label Apparel) business model incorporates the entire clothes-making

process from procurement of materials, product planning, development and manufacture through distribution and retail to inventory management.

39

prices ten times cheaper than existing brands. Consumers could shop more at

lower prices.

SPA stores typically take up thousands of square meters and carry a variety of

trendy goods at reasonable prices. Spain’s Mango and Japan’s Uniqlo have

been operating in Korea since 2001 and 2005, but it was not until Zara (2008;

Spain) and H&M (2010; Sweden) entered the Korean market that the SPA

market began to expand full swing. The Korean high-end apparel market has

been undergoing globalization ever since global luxury brands started

accelerating their expansion around 2000. However, the mid- to low-end

markets had long been dominated by local non-brand name firms until global

SPAs began full-scale growth. Global SPAs design products to satisfy global

consumers’ tastes rather than localize their designs. As they do not

differentiate their products by country, Korean consumers are offered

products with designs that are differentiated from those of domestic brands.

As domestic consumers are increasingly drawn to SPA brands, consumer tastes

are seeing rapid diversification, and the domestic fashion market is instantly

affected by global trends. To understand more closely which is the real fashion

industry in Koreais that despite the fact that the moniker "Seoul Fashion

Week" hasn't been in use for more than 5 years, the Korean fashion industry

has been on the international scene for far longer than that, although very

much behind the scenes. Much like the national economy that has been

developing for decades since the Korean War, the Korean fashion industry had

distinguished itself by virtue of its export-oriented nature. Many of those deep

in the fashion industry already know that South Korea has been a major

40

exporter of high quality textiles for decades already. But the country's fashion

industry has been moving from just being a textile export powerhouse to

producing world-class designers on the runways and sporting looks worth

following on the streets for some time now. Korea has the unfortunate luck to

be generally overlooked by the West until such time as historical or cultural

accident places South Korean cultural industries into the international

spotlight, often to the surprise of not just the rest of the world, but South

Korea itself. It was only a few years ago, back around 2008, that the various

fashion industry shows around Korea started billing themselves as a singular

event: not the "Seoul Collection" or the "Korean Fashion Designers Association

(KFDA) Show," but as "Seoul Fashion Week." This change in confidence and

attitude came along with the central and city governments' decision to heavily

financially back this event as a part of its overall effort to encourage higher

interest in and actively promote Korean "cultural industries" abroad. As a part

of what many South Koreans like to now call the "Korean wave," the fashion

industry has not enjoyed the success of other sectors of other so-called

"cultural industries", such as in film, television and pop music. But this is not

for lack of talent within the industry, but rather lies in the fact that "cultural

industries" are simply difficult to promote for promotion's sake, but usually

require a pivotal specific cultural product to blow up and lead the way. For a

while now, Seoul Fashion Week, in the form of the government suits who have

given the event major financial backing over the last few years, has made it a

stated goal to elevate themselves into the top fashion week events in the

world, which presently include New York, Paris, Milan, London, in no

41

particular order. But the one that most people would agree would go last in

any list that includes such cities would be Tokyo, a city and a fashion week

that Seoul would be more than happy to bump out of last place. So, the city of

Seoul is taking itself very seriously in carrying out "Seoul Fashion Week" on a

large scale and at an international level of quality that would be ready for the

likes of Anna Wintour to and take her place in the front, prime press seats

near the front of the runway. However, the planners of Seoul fashion week

can't expect Anna Wintour to show up with her notepad and attention ready

just because they want that to happen. Before the major international fashion

media takes notice of Korean fashion, there needs to be enough buzz by

notable medium-level fashion media outlets doing stories on Korean designers

and the street. And to get to that level, there need to be enough English

speaking bloggers and journalists doing stories on Korean fashion and soul

fashion week to generate the basic information, pictures, and stories on

Google for this process to even start. The biggest problem for the Korean

fashion industry is the same problem that other Korean cultural industries

have had, South Korea is a pretty insular culture, both online and off. There is

a lot of information about Korean fashion designers on the Internet. However,

most of it is in Korean, written with the common Korean cultural assumption

that no non-Koreans would care, anyway. This is combined with the fact that

even with international events about which non-Koreans probably would be

assumed to care, no one bothers to put the relevant information into English.

The reality is that Korean fashion isn't enough of a blip on the radar for most

cash-strapped media organizations to send writers and photographers to

42

cover. The Korean government has in the past invited and sponsored

international journalists cover its events, but the government suits frankly

have no idea what they are doing and whom to invite. Unfortunately, the

Korean way of doing things is very top-down, and the tendency is to start at

the top and move down, by inviting major media outlets and other famous

names in the industry, who, when they Google some of the names that might

appear in a poorly worded translation from a Korean press release, will find

very little information on Google. Koreans have only recently begun to deal

with the reality that most of the world uses Google as the main search engine

and not the domestic favourite, Naver. It's for this reason that Seoul Fashion

Week has recently started getting into the habit of not allowing bloggers and

smaller news outlets press access, even if they were producing content in

English about the event and its designers, which they sorely need. There is a

massive change in the way common people of Korea have been dressing up

and there is a sudden burst of new styles and unique expressions of fashion in

the Korean streets. Korean people today are willing to push certain boundaries

and are bolder in their outfits. Like with everything associated with Korea, the

most telling changes happened in fashion during times of war, economic

development plans and military rule. The 1990’s marked the upsurge of Korean

fashion. It was the time when people having high disposable income in Korea

started to spend it on fashion shopping. The country has some wonderful

designers and extremely talented technicians in sewing and dressmaking. But

the country is still fighting to come out of its image of a cheap raw material

supplier and is striving to make its mark in the fashion world. There are

43

various Korean bodies which are doing some excellent work in the fashion

scene like the Seoul Fashion Centre and the Korean Fashion Association.

Korean dresses are really fascinating and as is their history. More than some

thirty years ago hanbok, a traditional Korean clothing, was a part of any

Korean’s wardrobe. This dress too underwent many changes throughout the

turbulent Korean history. Hanbok in its traditional form has more curved

features. It uses a huge amount of fabric as they are not meant to be tight

fitting. The curvy and colourful nature of hanbok has a great influence over the

current fashion industry. By blending traditional hanbok with some modern

ideas many new styles were created. For 10 years, Korean people are started to

be obsessed by luxury goods, above all for apparel, shoes, and leather goods. In

little more than 10 years were opened thousands of store, temporary store,

flagships of the most important Western, almost all European, luxury brands.

Korea has come a long way since the 1970’s, when ruler-bearing policemen

stopped women on the street to measure the length of their skirts.

Cheongdam12 streets filled of flagship and stand-alone stores of the titans of

fashion: Gucci, Louis Vuitton, Hugo Boss, Dolce & Gabbana and Jil Sander. A

few "Coming Soon" signs for brands such as TSE and MCM wrap around

construction sites like monogrammed presents waiting to be opened by eager

shoppers. This is Seoul's Champs-Elysées, a concrete-and-glass table of

contents for the global fashion brands that also fill Seoul's department stores,

such as Lotte, Hyundai, Galleria and Shinsegae, Korea's oldest. Retail rents in

12

Cheongdam-dongis a ward of Gangnam-gu in Seoul, South Korea. The area epitomizes the wealthy lifestyle of

Koreans, especially for young professionals who have studied overseas. It is known as an upmarket shopping area, with the main shopping street called “Cheongdam’s Fashion Street”. Along with Apgujeong’s Rodeo Street in Apgujeong-dong and Garosu-gil in Sinsa-dong, which are connected by the main Apgujeong-ro, they are seen as fashionable and trendsetting destinations.

44

the Cheong-dam and Apkujeong neighbourhoods, the priciest in Korea, have

quadrupled over the past 10 years. Just 12 years after opening as a liberalized

market, Korea is now a boomtown for international brands taking advantage

of double-digit growth in the luxury sector, even amid Korea's severe

economic downturn.

45

2.2 Luxury Good Obsession

In 2010, The New York Times wrote an intriguing article about a robbery

incident in South Korea. The article described a thief who stole approximately

1,700 pairs of designer shoes from different restaurants. When the police

caught him and investigated the case, they found thousands of stolen pairs of

shoes. In order to return the shoes to original owners, all of the shoes were

arranged in the backyard of the station by sizes and brands. When the media

broadcasted the incident, many people came to the office to claim their shoes.

To prevent a second theft, police suggested candidates to tell their size, color,

and brand of lost shoes and only about 500 pairs of shoes were returned to

owners. One unique aspect of this incident was that the majority shoes seem

to be similar and could be narrowed down to one Italian brand, “Salvatore

Ferragamo” one of the most beloved luxury shoe brands by Koreans. It is well

known that people in Asia have a strong passion for luxury brands. South

Korea is no exception. More and more brands set up flagship stores in major

department stores. Younger generations who often cannot afford authentic

luxury brand clothing and bags work part-time jobs to purchase a $500 dollar

bag equivalent to two or three salary months. In addition, numerous shopping

websites target high school or college students and sell imitation products for

a fraction of the price of authentic ones. The research begins with the question

about excessive love of luxury among the current young generation. The paper

mainly concentrates on the causes of prestige commodity addiction and

46

generational discrepancies of luxury consumption. The reasons of luxury

seeking can be diverse. Loss of traditional high class and new social order

caused by Japanese colonization and the Korean War gradually transformed

the value of nobility. Wealth became a primary measure for determining high

class. Korea’s strict sense of social hierarchy encourages the upper class to

purchase luxury commodity as a symbol of status. The favoring of Western

culture increases the social value of Western products while egalitarianism

encourages the middle class to imitate the life-style of the high class.

Narcissism allows young people to express love of self through adornment.

Likewise, strong collectivism evokes the desire to fit into the community and

the competitive spirit drives people to prevail over others through

extravagance. In the field of economics, the introduction of credit cards

facilitates easy and fast consumption. Current young people in Korea seem

more set on the purchase of luxury items. The differences between old and

young people are caused by the experience of hunger, economic change,

different function of the media, children’s new play culture, little emperor

syndrome, and new political transformation. Through examinations of diverse

aspects and history of social hierarchical transformation, the study aims to the

better comprehension of luxury obsession in Korea, especially the current

generation. The initial cause of indiscreet luxury consumption derives from

the collapse of nobility culture. Social transitions provided unlimited access to

a luxury commodity. Wealthy people who did not acquire inner aspects of

nobles imitated the high class culture of the West. Unfortunately, Korea’s high

class focused more on the external values of Western culture and the behavior

47

encouraged more luxury consumption for high social status. Japanese

colonization contributed to the destruction of Korea’s social class system. The

war damaged many nobles’ genealogy books as well as documents of slaves,

accelerating the collapse of stratification in Korea. Japan intended to eliminate

social class in Korea during this time. Under Japanese subjugation, there were

only Japanese rulers while the rest were Koreans. During thirty six years,

except for a few collaborators, all Koreans were in the same social position.

The distinction between nobles and commoners was blurred and Japanese

colonization eliminated the visible caste system in Korea. After independence

in 1945, the government devalued tradition in the process of development and

noble culture slowly faded. As a result, Korea only has high class in economic

terms. Not everyone could purchase luxury goods or had accessibility until the

end of 1980. Regardless of urbanization, economic success, and foreign trade,

Korean society was not yet ready for a consumption driven economy. People

still had a harsh memory of the Korean War and the government was reluctant

to imported goods in Korea. Until the 1960 and 1970s, the society’s primary

concern was the reconstruction of the devastated Korean economy. Numerous

amounts of men went to other countries and brought foreign funds into the

country. The government put an emphasis on frugality and collective works. A

fear of another possible war and the high interest rate of banks encouraged

more savings than consumption. In addition, the government merely focused

on heavy industries so that the types of consumer goods in the domestic

market were limited. The initial contact of luxury goods in South Korea began

in the 1970’s. The government’s protective trade policy prohibited various

48

items such as agricultural crops, industrial finished goods, and luxury products

from being sold in the domestic market. The government was concerned with

the threat of a foreign product’s high quality that might impede national

development. Fierce trade restrictions of quota and high tariffs and growing

demands on foreign goods eventually resulted in an emergence of black

marketers referred to as “suitcase businessmen”. They brought many luxury

items to consumers. Their main source of illegal importation was U.S. military

bases where people could smuggle a small quantity of foreign luxury goods. In

the late 1980’s, South Korea’s domestic market demanded more attention.

Since 1987, people’s salary had increased and the average wage went up fifty

percent between 1986 and 1990. In order to keep up with ascending wages and

high demands of consumer goods, the government restructured the economy.

The government put more emphasis on domestic consumption and service

sectors that fulfilled the demands of nearly 43 million people. From 1960 to

1980, the social atmosphere did not welcome ravish consumption. The

government promoted personal saving and frugality and discouraged people

from purchasing imported goods and luxury commodities. In this period, the

government even revealed the lists of people who consumed expensive foreign

products and inspected their taxations. When the government’s policy

changed the direction to a consumption driven economy, people’s desire for

luxury began to burst out. The older generations often say the phrase,

“conservation is a virtue” to the current younger generation. On the other

hand, the current young generation often does not comprehend their parents’

position on consumption. Various elements can account for the two

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generations’ different viewpoints on luxury commodity and consumption

patterns. The sensitivity of hierarchy evokes the fear of identification. As a

result, the upper class displays a greater desire for luxury items for better

distinction and acknowledgement. People in South Korea have an unusual

sensibility for hierarchy. Deciding ranks in a group is a common behavior in all

community types. According to ages and positions, Koreans have determined

their social levels and maintained their ranks in groups. Luxury commodity

consumption has a strong relationship with a unique Korean trait, authentic

favoritism. Around the globe, no other country puts so much emphasis on the

idea of authenticity as South Korea. From a historical aspect, Koreans’ attitude

toward genealogy describes their love for legitimacy and authenticity. The

older generations still consider the roots of the family and a pure Korean

bloodline. Around the streets in Korea, numerous restaurants put the term,

original, on signs to emphasize the authenticity and long tradition of their

foods. People’s preference for authenticity, without impurities, is not limited

to food. Koreans’ love of authenticity was conducive to luxury commodity

consumption. The long history of High-end brands and their traditional value

attracted people. If the brand’s history was attached to the Western royal

families such as Louis Vuitton and Chaumet, the attractiveness would be

doubled. For Koreans who had lost many traditional values through invasions,

a luxury goods’ inherited traditional value could fulfill people’s desire of

authenticity to some degree. In contrast to ancient Korea where a strong

hierarchy and a limited accessibility of luxury commodities existed,

contemporary Korean society can be characterized by materialism and a

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universal access of luxury goods. The introduction of capitalism and rapid

economic growth changed the traditional norm of hierarchy in South Korea.

Japanese colonization eliminated Korea’s traditional noble culture. The high

class in Korea was wealthy but could not maintain the spiritual and cultural

manners and values of what previous nobility had. Wealth became a prime

marker of social class in contemporary Korean society. The absence of the

traditional high-class culture had a serious impact. The new wealthy class

failed to learn the traditional yangban13 culture and began to imitate the high

class of the West. The pitiful thing was that the high class in Korea merely

adopted a materialistic attribute and ignored the moral and cultural values of

Western nobility. As a result, wealth became a significant factor which

determined people’s social status. Overall, the whole Korean community

represents upward mobility through luxury consumption. Lack of a traditional

aristocratic way of life, reckless imitation of Western high-class culture, and

the easy accessibility of a luxury commodity encouraged most Koreans to

pursue a higher status. Various aspects account for the phenomena of the

whole society’s upwards. Consumption in the present society has to be

understood as a symbol. The Western supremacy in Korea leads to favoritism

for Western products. As a result, a luxury commodity attracts more people as

a tool for social status indicator. When the sensibility on hierarchy is related to

the nation, it turns into an envy of the West. In other words, people admire

Western culture or products and relatively devalue their own society. Luxury

addiction is not a unique phenomenon. The tendency can be found all over

13

The yangban were part of the traditional ruling class or nobles of dynastic Korea during the Joseon Dynasty. The

yangban were mainly composed of civil servants and military officers. The yangban were either landed or unlanded aristocracy who comprised the Korean Confucian idea of a "scholarly official”.

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the world. People in the West also purchase prestige items as status markers.

The upper class enjoys the exclusiveness that luxury goods provide.

Nevertheless, the obsession in Korea seems outstanding. Most second and

third floors in department stores are filled with various luxurious brands and

young people spend most of their monthly salary to purchase designer label

goods. Different Korean traits account for the prestige addition of the current

generation. A visible class distinction had been gone since Japanese

colonization and a lack of nobility culture created a high class mainly

determined by wealth. Young people, as a result, seek for luxury goods as a

means of differentiation and as a representation of high social status. At the

same time, the Western-centrism was conducive to luxury consumption.

Imprudent imitation of Western noble culture merely amplified a desire for

Western commodity. The attitude which favors Western-made products

encourages people to purchase more European luxury goods. Koreans are

susceptible to equalitarianism. The middle class envies and imitates the life of

the upper class. Through luxury possession, people equate their lives with

those of wealthy people. Emerging narcissism promotes the young

generation’s adornment. Through emulation of entertainers from the media,

people attempt to achieve ideal figures. Young people put an emphasis on

external factors and strive to purchase expensive goods which many

entertainers have. Asian collectivism creates the sense that people are afraid of

being excluded and follow consumption of fellows. The sense of competition

also encourages the purchase of more luxury goods to win over others.

Korean’s love of authenticity also accelerates luxury expenditure due to a long

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history and origin of the West. There is also an economic factor that causes

luxury consumption: the introduction of credit cards. Plastic allows people to

purchase products without money and encourages consumption. Rapid

expansion of credit card uses and easy installments eventually increase the sale

of luxury brands. Another element is the nature of luxury industry. Various

designer brands target the upper class due to its impacts on broader markets.

In addition, the limited quantity arouses people’s possessiveness which

encourages continuous luxury consumption.

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2.3 Distribution Channels & Marketing Strategies

While Department Stores remain by far the most important channel for luxury

in Korea, new channels, such as premium outlets and online shops, are

generating traffic. Perhaps not surprisingly, it is South Korea’s major

Department Store chains (Lotte, Shinsegae, and Hyundai, which together

account for three quarters of all luxury sales) that are helping to develop these

newer channels and thus extending their influence through diversification.

• Department stores remain the premier sales channel, thanks to strong

relationships with shoppers, discounts and special offers, and non-

monetary incentives provided through loyalty club memberships14.

These programs offer benefits ranging from cash rebates and special gifts

to free parking and VIP lounge access. In 2009, more than 70 percent of

respondents bought luxury goods at department stores, which are

omnipresent, with strategically located, self-contained structures. Luxury

players recognize their importance.

• Brand boutiques are a staple of many luxury brands. While offering

visibility, our data suggests that visits, purchases, and conversion rates

tend to be three to- seven percent lower, depending on the category, than

for department stores “Our brand shops do not actually make money due

to the large retail space and high labour costs; it is there more for

14

Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behaviour,

which is potentially beneficial to the firm. In marketing generally and in retailing more specifically, a loyalty card, rewards card, points card, advantage card, or club card is a plastic or paper card, visually similar to a credit card, debit card, or digital card that identifies the card holder as a member in a loyalty program.

54

symbolic reasons,” according to one luxury company executive. Done

right, a small number of brand boutiques can serve as powerful

communications and marketing tools. Maison Hermès, which opened in

2006 at Seoul’s Dosan Park, is a 10-story building with just two floors of

retail, and the remainder occupied by restaurants, an atelier, and an art

gallery, all intended to provide a unique Hermès experience

• Premium outlets are another, relatively new, sales channel. These are

shops located away from city centres that specialize in bargain-priced, off-

season goods. Department stores, which also own the outlets, have

succeeded in launching the format by encouraging the brands that they

act as agents or partners for. Though only about 10 percent of Korean

consumers in our survey said they had visited premium outlets for a

luxury goods purchase in the past 12 months, revenue growth has been

impressive. Kimhae Outlet, opened by Lotte in 2008, last year declared a

155 percent increase in sales. Shinsegae will open its second location, in

Paju this year, and a third planned for Busan.

• E-commerce is emerging as a useful marketing, communications, and e-

commerce platform. Online shopping is hardly new in South Korea, which

is one of the most wired countries on the planet. In fact, more than 40

percent of our online survey respondents have visited an online channel

at least once for a luxury goods purchase. Also, 35-45 percent of current

customers mentioned they were purchasing more online than in the past.

At the moment, however, it is primarily the less expensive items that are

moving, with an average purchase of about $50 per item, compared with

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over $100 per item, offline. Many Koreans resist making big purchases

online because of concerns about authenticity, sizes, after-sales service,

and the need to see and touch the product before buying.

Compared to China or Japan, South Korea’s luxury goods market looks small.

But its growth and diversification should give luxury-goods makers pause.

Investing an appropriate amount of management time on the following

considerations could prove highly profitable:

• Exert tighter control of the brand image, given the need to target

emerging luxury consumer segments with “entry level” product lines,

the most effective luxury narratives in South Korea will need to

emphasize the brand story and protect the prestige associated with it.

“Affordable luxury” items have become an important strategic element

in the product-mix for capturing a wider consumer market, but a brand

needs to guard against making the label feel too accessible or common.

Koreans are more often looking to trade up than down. There multiple

approaches for addressing this issue. Armani, one of the most popular

luxury apparel brands in Korea, captures customers in its most

accessible tier and preserves their loyalty as they move up from

Emporio Armani to Armani Collezioni, and finally to Giorgio Armani

Black Label. Hermès has enjoyed much success with under-$500

bracelets, which are accessible to younger customers with thinner

wallets, yet allow the company to maintain its price point and brand

prestige.

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• Invest in CRM15, given the dominant position of Korean department

stores, most customer transactions, and in many cases the transaction

data, are owned by retailers. Over the long-term, luxury brands will

need to build and maintain relationships directly with their consumers

to learn from them. An important start is to gather proprietary

customer data. As membership programs proliferate, however,

customers are less inclined to undertake the often cumbersome

enrolment process. Overcoming the barrier will require creativity and

persistence. For example, luxury cosmetics brands such as Estée Lauder

and Fresh have succeeded in making the process easier for customers

by affixing small stickers to the backs of credit cards with membership

bar codes. Some high-end fashion brands, such as DKNY in Korea, have

made membership more appealing by holding invitation-only functions,

such as parties and limited edition sales events.

• Ensure consistent multichannel management, following the lead of

department stores, luxury labels also need the capability to coordinate a

variety of sales channels, from operating proprietary boutiques

(including new premium outlet locations) to selling online. For the

latter, investing in a good Korean language-friendly website is

imperative, but not sufficient. Especially in the luxury sector, looks and

details matter, photos must be of excellent quality and the product

descriptions need to be well-written. The website is increasingly

becoming the first place shoppers look to get more information about

15

Customer relationship management (CRM) is a system for managing a company’s interactions with current and

future customers. It often involves using technology to organize, automate and synchronize sales, marketing, customer service, and technical support.

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products and brands, so the same degree of thought and precision that

goes into developing magazine advertisements or flagship stores must

go into the digital channel. Elle Atzine, an online community site

launched last November by fashion magazine Elle Korea, is emerging as

the “go-to” place for consumers to check out luxury products before

visiting land-based stores.

Although the contribution of online channels to total apparel consumption

has been stagnant, the value of online shopping is steadily increasing. Since

online shopping channels are undergoing diversification thanks to

smartphones and mobile commerce, the expectations for additional expansion

of online shopping remain high. With three-quarters of Koreans owning

smartphones, a dynamic mobile marketing and commerce strategy will help

retailers compete. Around 60% of Borderfree’s Korea sales and 20% of its

population are based in Seoul, meaning significant benefits for geo-targeting

your ads. Koreans are highly responsive to online sales; they have money to

spend and are swayed by bargains, meaning deals posted in online

communities can go viral fast. The percentage of discount-priced SKU16s

purchased by Koreans is the highest across the Borderfree network. South

Koreans frequently visit and study in the U.S., exposing them to U.S. brands

and highlighting the dramatic cost-savings available from buying abroad.

However, language is still a significant barrier to comfort and conversion, and

translated content is strongly encouraged. Consumer behaviour is shifting as

16

In the field of inventory management, a stock keeping unit or SKU is a distinct item, such as a product or service, as

it is offered for sale that embodies all attributes associated with the item and that distinguish it from all other items. For a product, these attributes include, but are not limited to, manufacturer, product description, materials, sizes, colours, packaging, and warranty terms. When a business takes an inventory, it counts the quantity of each stock keeping unit. SKU can also refer to a unique identifier or code that refers to the particular stock keeping unit.

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savvy shoppers learn to buy goods abroad. An increasing number of Koreans

shop overseas retailers to find lower prices, leverage parcel-forwarding to save

on shipping costs and join online communities to resell imported items they

don’t want. The South Korean won (KRW) hit a six-year high in April 2014.

With its strong currency, demonstrated zeal for shopping online, broad access

to credit cards for online payments and world leadership in broadband speed

and penetration, South Korea is expected to be a top growth channel for

ecommerce.

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3 Korean Star System Marketing

3.1 Korean Wave

“Korean Wave” is used to refer the significant growth of popularity of the

South Korean culture around the world. While “Hallyu” which is a Korean

pronunciation of the Korean Wave, is also widely used to represent the love of

Korean pop culture as well as the appreciation of all things from South Korea.

What is the Korean wave? The Korean wave is American pop culture in Korean

style which is combination of local and global culture. It may not be truly

Korean or traditional Korean culture but it is cultural products for mass

market as popular mass culture. Many people are wondering why the United

State and Japan have dominated the pop culture in Asia before and now it has

changed to the Korean Wave. Is because South Korea had a stronger economic

and political democracy than the past which means their living standard are

higher and they now have thought to enrich their life, culture and spiritual.

Since their democracy became stronger, so movies and music have more

freedom to show the expression. Moreover, Korean culture assumed that there

is nature in entertaining and admire the quality of production. The term

known as the Korean Wave or Hallyu was born after the world economy

collapsed during 1998. Many countries around the globe especially Asian

countries have faced the economic recession which has slowed the growth of

their economy and also reduced their GDP and of course South Korea which

also had to face this crisis cruelly as it was shown in their GDP that dropped by

seven percent. Therefore, South Korean administrations decided to use the

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Hallyu as an opponent to expand their rich culture through their

entertainment industries which include soap operas, movies and music as well

as eliminating the negative profile that was influenced by the image of North

Korea. In addition, this could also create a demand of its cultural exports and

tourism as it showed in 2008 that the total number of cultural products

exported had risen to $1.8 billion. The term Hallyu refers to the phenomenon

of Korea’s culture becoming the most important cultural force in Asia and

beyond. Korean movies, television shows and k-pop are enjoyed everywhere in

the world. The Korean wave started with the export of dramas to China and

since then Korea started to export its cultural products to elsewhere in Asia.

More recently the Korean wave started to expand into the Middle East,

Europe, South America, Africa and North America. Hallyu has led to a boost of

tourism to Korea. Korea has transformed itself in a few years from a nation

with no cultural significance to “a new centre of cultural production in Asia”.

Nowadays we can see that the Korean Wave starts to become a global

phenomenon. In order to understand the Korean Wave I want to look at how

the Korean entertainment industry: music, television and movies have

developed. The 1980’s can be characterized by a rapid economical

development and an authoritarian political system in South Korea. Korea was

developing its economy and people became more affluent. The average income

per person in 1968 was only $54. In 1978 this had increased to $390. Between

1984 and 1988 the average income rose from $1770 to $3120. This rise in income

made it possible for ordinary Koreans to spend their money on leisure

activities. The locations where used for shooting famous Korean TV dramas

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became significantly popular these days. It was not a coincident success but it

was an intention from the cooperation between the public and private sectors

in selecting Korean provinces as locations of shooting climax scenes. Each

province needed to compete with each other in order to get elected. The

government tried to apply media to convey Korean culture towards other

countries as it was said that “The best marketing media is drama series.” One

of the most successful Korean TV dramas was “Jewel in the Palace”, this drama

portrayed Korean traditional food knowledge, way of life and nationalism. It

became successful across Asia countries. Un Mun Kee, chief of the Global

Strategy department of KBS17, stated that the producers intended to export its

drama to other countries and targeted viewers from both local and foreign

market. They had studied audiences in each market in furtherance of meeting

the market needs and produced it through Korean taste. Moreover, the factors

behind achievement also resulted from the various reasons, such as, high

investment in production quality, good actors and attractive storyline. After

the drama ended, the shooting studio turned into a famous tourist destination

providing the important scenes such as the Royal kitchen, or even the

costumes and accessories of the actors. The achievement was not only in

creating a new tourist destination for the country but also promoting Korean

traditional food in every country that the drama broadcasted also. One

important aspect of the Hallyu phenomenon is K-pop. This type of music

includes dance, electronic music, electro pop, hip-hop and R&B. Within South

Korea the term K-pop refers to a broad spectrum of music styles including

17

Korean Broadcasting System (KBS) is the national broadcaster of South Korea. It was founded in 1927, and

operates radio, television and online services, being one of the biggest South Korean television networks.

62

rock, ballads and pop music. It all refers to music that is produced by people

from Korean origin and sung in Korean. K-pop within South Korea is

enormously popular. The term K-pop started to get widely used overseas. It

was the Korean wave that brought K-pop under attention of international

audiences. Internationally K-pop refers to the Korean pop idols. In this paper I

will use the definition as it is used outside of South Korea. This is because

international newspapers and scholarly publications use this definition when

they speak of K-pop. Also when people talk about K-pop on the internet, they

refer to the Korean boy bands and girl bands. Korean music developed into an

independent industry in the early 1990’s. At this time Korean society was

experiencing a rapid economic development. As a result of this the

entertainment industries started to grow. Popular culture started to become

attractive for major corporations in South Korea to further exploit. After 1990

corporate television channels were allowed to broadcast on Korean television.

These new channels used music to fill their programming. Music videos, clips

from concerts, reports about concerts and albums and interviews with pop

singers were constantly shown on television. The music industry realized the

potential of this and used television to market their new artists. New K-pop

artist from the bigger music entertainment companies, like SM Entertainment,

YG Entertainment and JYP Entertainment, are broadcasted on television with a

live performance. Television is essential in the way this Idol Culture18 is

created and sustained. Not only lyrics and melodies are important in K-pop,

18

A K-pop idol, or Korean pop idol, is a popular K-pop celebrity who has trained hard for many years after having

passed various stages of auditions held by South Korean talent agencies such as SM Entertainment, YG Entertainment and JYP Entertainment. The stereotypical K-pop idol is: incredibly young, good-looking, and able to carry a melodramatic note.

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but also the visual element. The looks and performance of a group are now a

vital part of K-pop. Over the last decades K-pop idols appear in a lot of

different shows, ranging from talk shows to slapstick comedy shows. K-pop

stars are not just singers, they are entertainers. Showing up in TV-programs

makes a singer more popular and will make his album sales rise. Also the step

from being a singer to being an actor is a small one. Many k-pop idols appear

as actors in Korean dramas. As we can see in South Korea television and music

are connected to each other. They both need each other to attract viewers and

fans.

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3.2 Celebrities Who Became Advertising

The main factors behind the success of K-pop can be summarized in:

1) Creators, Entertainment companies who produce and promote K-pop music

and train performers;

2) Distribution, social media channels that spread K-pop internationally;

3) Consumers, the fans who enjoy and share information about K-pop music

and performers;

4) Contents, the K-pop style of singing and dancing that is constantly

refreshed.

Now Korea’s major cultural product, K-pop is creating massive added value.

Other fields of business need to take the strategic values of K-pop, the songs,

the singers and the fans, as a stepping stone for the development of new

products, establishment of new marketing strategies, and exploration of new

markets. First, businesses should try to develop products derived from K-pop

to create added value. Game developers and animators should create products

that feature K-pop characters and contents, while producers of musicals and

TV dramas should explore ways to incorporate K-pop songs and the singers.

Second, products that will attract K-pop fans should be developed. To attract

more tourists, it is necessary to create tourist products that combine K-pop

content with sightseeing and shopping, and turn places strongly associated

with K-pop into landmark sites. Third, to make the most of publicity and

marketing, collaborative efforts should be made with K-pop singers, who are

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known for their fashion and sense of style. Fourth, new marketing strategies

should be adopted, such as using K-pop stars as models to advertise products

that are closely connected to pop music. Lastly, K-pop fans can be used to pave

the way for Korean products overseas. Using YouTube and other social media,

the major medium for the spread of K-pop, plans for the overseas entry of

Korean products need to be fine-tuned according to region. The success of K-

pop can be attributed to the systematic creation of stars, trained thoroughly

from the outset with the global market in mind and from a long-term

perspective. Taking lessons from this example, a third and fourth Korean

Wave can be triggered, raising awareness of Korea and leading to the

diversification of exports. The cultural diamond model used in sociology was

employed to analyse the factors behind the success of K-pop. In greater detail:

1) Creators: Entertainment companies developed systemized training and

carefully laid plans to advance into overseas markets;

2) Distribution: The time and cost for entering overseas markets is shortened

with the use of social media such as YouTube, Facebook and Twitter, through

which contents are spread spontaneously;

3) Consumers: The rapid spread of the popularity of K-pop can be attributed to

fans who are typically tech-savvy and eager to share information and opinions;

and

4) Contents: K-pop stars display highly polished levels of singing and dance

and attractive looks. They attract fans and maintain their popularity by

constantly trying to release new songs and refining their style.

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Entertainment companies have developed a systemized process of nurturing

stars and carefully crafting long-term preparations to advance into overseas

markets. From casting to promotion, the whole process is methodically

organized and singers are trained from the outset with the international

market in mind. The practice of putting countless numbers of hopefuls

through training to select the cream of the crop is one of the keys to K-pop’s

competitiveness.

• Casting, Finding Diamonds in the Rough: no effort is spared at finding

the right people under the belief that working with good material is the

road to success. Trainees are selected through various channels,

including auditions and recommendations from celebrities. “When we

choose people, we first look at their talent along with their hidden

potential,” says Yang Hyun-Suk, head of YG Entertainment. Through

global auditions, would-be stars are also chosen from other countries.

SM Entertainment, for example, has since 2006 held annual overseas

auditions in the United States, Canada, Thailand and other countries.

These auditions attract as many as 30,000 hopefuls annually, and so far

some 100 people have been chosen for training.

• Training, Long-term Investment in Cultivating Top-class Entertainers:

the entertainment companies are highly discriminating gatekeepers,

selecting only the very best trainees to turn into pop stars. The chosen

few are drilled not only in song and dance but also foreign languages,

and go through character building and psychological consulting

programs. Underage trainees are strictly forbidden from smoking or

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drinking alcohol and violators are dismissed. The trainees must endure

a difficult and rigorous program where they are continuously evaluated

through survival-style competitions, and push themselves hard to come

out on top. The evaluation process includes a concert held every

fortnight to test the trainees’ talent and foreign language ability. When

forming new groups, the members are not selected first. Rather, the

image of the new group is decided first and different combinations of

members are tested to find the ones who fit the concept. The singing,

acting and dancing roles are divided according to each member’s

strengths to create synergy in the group. The entertainment companies

invest a considerable amount of time and money on training. The

average training period is five years, during which time the company

bears all living expenses and costs. The members of Girls’ Generation

spent five years as trainees, Big Bang six years, and Dong Bang Shin Ki

(TVXQ) seven years. Return on this heavy investment comes when

some of the trainees become stars and that money in turn is invested in

the next batch of trainees.

• Production, Global Sourcing: renowned experts in each field of album

production are recruited to raise the quality. Ideas for songs are

collected externally from the planning stage. SM Entertainment invites

about 300 composers from around the world to participate in two

conferences held annually in Korea. In this way, professionals from

different countries and fields of expertise are widely employed in the

production stage. As an example of such international cooperation.

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• Global Promotion, Cooperation with Local Partners: to minimize the

risk and uncertainty associated with entering foreign markets, Korea’s

entertainment companies form partnerships with local agencies and

record companies. For example, when entering the Japanese market,

they formed partnerships with influential companies such as Universal

Japan and Avex. The overall concept was created in Korea and

promotion and distribution plans were adjusted by the Japanese

partners to suit the local market.

As a strategy to overcome cultural barriers, localized versions of albums are

released and local tastes and culture are reflected in the lyrics, music videos

and fashion. As a result, K-pop songs recorded in the local language are often

used in local TV dramas, advertisements and films’-pop is delivered

simultaneously around the world by making active use of social media such as

Facebook, YouTube and Twitter. As news spreads rapidly through these

channels, the time and cost of entering foreign markets can be reduced. In the

early days, K-pop stars also use social media to communicate directly with

their fans worldwide, keeping them abreast of their latest activities. Taking

social media as a platform for consumption of K-pop, the entertainment

companies are trying to develop suitable contents for distribution online. They

maintain employees whose job is real time monitoring of social media to gain

an idea of the popularity of their stars and the buzz about them. Before

releasing an album, music video teasers are put online to make news and spark

the interest of fans. As the influence of YouTube grows, tremendous amounts

of effort are put into making attractive music videos of the new songs. The

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main consumers of K-pop are young people who are at home with social media

and IT devices. While fans of Korean TV dramas are mostly middle-aged

women, the majority of K-pop fans are young women in their teens and

twenties. Rather than listening to albums, they get their dose of Korean music

and music videos online and on mobile devices.K-pop fans are active receptors

of cultural influence who express themselves freely. They don’t just listen to

the music; they also create ways of having fun with it. For example, cover

dance videos of K-pop songs have become a well-established form of online

entertainment among K-pop fans. In parts of Europe and South America,

where little K-pop promotion has been conducted, online fan clubs have

appeared, making up part of the estimated 3.3 million K-pop fan club members

worldwide. K-pop stars have captivated world audiences with a combination of

strong singing skills, dance choreography and attractive appearances and

styles. They are highly competitive and constantly try new ways to reinvent

themselves. On stage, K-pop concerts are a feast for the eyes. To succeed

internationally, efforts are made to clearly distinguish K-pop from American

pop and Japanese pop (J-pop). Instead of the provocative and violent elements

found in mainstream genres such as R&B and hip hop, K-pop is more innocent

and passionate. In this regard, Melvin Brown, producer for Lady Gaga, has said

he feels that K-pop has potential in the American market, considering that

American and European audiences are looking for something new.

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3.3 How it Affects The Brand's Knowledge

The promotional effect can be maximized through collaboration with K-pop

stars known for their style and fashion sense. The singers’ images may be

projected onto the products by encouraging their involvement from the

product development stage. The involvement of internationally popular K-pop

stars in the product development processes is in itself enough to create a buzz.

These days, major business corporations in various fields pursue active

collaboration with pop artists. The global fast fashion brand H&M has been

working with Madonna and cosmetics brand Elizabeth Arden with Britney

Spears. The K-pop band Big Bang has worked with American hip hop artist

Ludacris to produce and endorse a line of headphones called Soul by Ludacris,

also known locally as the “Big Bang headphones”. In this way, celebrity

involvement in the design of fashion and beauty products or in the audio

enhancement of IT and electronic products can make the most of marketing

and promotion efforts. Celebrity collaboration can also help distinguish a

product from others. The Louis Vuitton shoes designed by American hip hop

artist Kanye West sold out as soon as they were launched on the market,

despite their $1,000 price tag. Korean products can be made more appealing in

international markets by using K-pop stars with the right image as advertising

models. Idol stars are particularly effective in this respect as young fans in

their teens and twenties like to know everything about their favourite stars

and emulate them, very often using the same products that they use.

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Advertising for everyday consumer goods such as food and beverages,

cosmetics and fashion can be tailored to different markets by using the

celebrities who are popular in each region. IT companies and automakers are

also using K-pop stars to convey their technological capabilities. Indirect

publicity is sought through sponsorship of concerts and music video

production. Products are exposed in the form of product placement in the

videos or through advertising before or after music video broadcasts. Cultural

marketing is also growing as businesses sponsor more big events such as K-

pop concerts and cover dance competitions. As K-pop spreads among young

people around the world, K-pop fans are forming an attractive new “global

segment”. In other words, these young fans of diverse nationalities are seen as

a new global market. In the words of Lee Soo-man, head of SM Entertainment,

“A virtual nation that defies the traditional concept of nation is rapidly

emerging. Fans worldwide who watch and listen to SM content on Facebook

or YouTube are citizens of the SM nation”. Mostly in their teens and twenties,

K-pop fans are likely to be trendsetters in their respective countries. This

indicates the possibility of expanding markets in the future. Hence, Korean

companies can use the K-pop fan base to gain a foothold in new markets for

their products. While Korean products have already built a consumer base in

some parts of Asia, the Middle East, South America and Europe are emerging

as new export markets. Indeed, under the influence of the new Korean Wave

driven by K-pop, exports to the Middle East recently reached $10 billion for the

first time and exports of consumer goods to South America have jumped 49.9

percent.

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Strategies for entering foreign markets need to be fined-tuned according to

the region, and good use should be made of YouTube and other social media,

the main channels for the spread of K-pop. YouTube’s music video statistics

give an indication of which songs are popular in which countries and how they

can be used to differentiate markets. On the YouTube world map, countries

are marked in one of five shades of light to dark according to the frequency of

views of a certain video. The map shows that videos of popular Japanese and

Chinese acts are mostly viewed in the singers’ home countries while those of

K-pop artists are viewed around the world, which provides useful information

for establishing business strategies for each market. Reflecting the

characteristics of emerging and advanced markets, strategies for market

expansion could make use of K-pop fans in different ways. In newer markets

such as the Middle East and South America, the popularity of K-pop is linked

with Korea’s national image and, thanks to the consequent increase in

awareness of Korea, sales of Korean products rise accordingly. In established

pop music markets such as the United States and Europe, the emphasis is

taken away from Korea to focus rather on the name value of the entertainment

companies producing K-pop or the features of related products. Under “born

global” strategies, products are developed with the global market in mind and

distribution and operation systems are established with local partners. In this

line, entertainment companies can raise their chances of success by recruiting

trainees for pre-selected target markets, teaching them the language and

etiquette of the country concerned and producing music and choreography

accordingly. A global strategy should be seen not just as a way to enter foreign

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markets but the pursuit of open innovation whereby research and

development and supply of key resources is carried out on a global level. K-

pop songs are created to appeal to global consumers with the help of world-

renowned experts in composition, lyrics, choreography, style and concept. In

the same way, businesses should seek to complement their weaknesses with

resources in the global market rather than trying to be an expert in all areas

before entering international competition. Departing from the notion that

traditional culture is the only Korean-style culture, K-pop is a success in the

global market thanks to its sophisticated expression of Korean-style traits such

as dynamism and high-spiritedness. Even companies that deal mainly with the

domestic market can learn a lesson from K-pop’s formula for global success to

reinterpret and recreate Korean-style traits in preparation to advance overseas.

Local retail, food and beverage chains and multiplex cinemas, which have

reached a high level of expertise through domestic competition with leading

firms, are also making bold moves into the global market. Cultural products

such as musicals, games and variety programs, as well as fashion and beauty

products, tourism and Korean food are all potential resources for the third

Korean Wave, following TV dramas and K-pop.

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4 FieldWork: The Case of “Borgo Italia”

4.1 My work for Borgo Italia in South Korea

As I already told I arrived in South Korea without know almost nothing about

this country. Everybody told me that was crazy to go completely alone with no

office, with no connection, with no work experience abroad, with no

knowledge about the culture and the language. But it was exactly this that

helped and gave me the power to tackle this great experience. When I arrived

in Seoul I knew very well all that I had to do for my companies. So after 1 week

of cultural shock in a guesthouse I found a room in a shared house and I

started to work really hard. First of all, I started to do a lot of Market Analysis

for my different companies. Operating in different fields like Kids Wear,

Woman Dress and Furniture, I had to go in many different places to find

competitors and to understand the Markup19, essential thing to penetrate a

foreign market. For the first 2 months I visited every luxury Department Store

(Lotte, Hyundai, Shinsegae and Galleria) in the most popular city in South

Korea (Seoul and Busan) studying and analyzing all the competitors of my

companies and trying to understand the right Mark Up to be competitive. I

was during those 2 months the Mystery Shopper, asking and checking the

price and the brands in the Stores, and the Analyzer at home, collecting the

data and planning the next steps. I think that this first period of scouting is

19

Markup is the difference between the cost of a good or service and its selling price. A markup is added onto the

total cost incurred by the producer of a good or service in order to create a profit. The total cost reflects the total amount of both fixed and variable expenses to produce and distribute a product.

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one of the most important for a Business Development Manager, because it is

the initial phase in which you can explore a country, meet new people and

start to understand “where you are”. Knew a lot of people help you also in your

work. In fact in this first period, I also made a brochure of “Borgo Italia”, about

my companies, to give like an introduction, at the beginning of a meeting. Of

course I did this brochure in English and Korean, but I had not enough money

to hire a professional translator to translate everything in Korean. So I started

to ask some pleasure to all the young Korean that I met before to translate for

me some documents. So it was, after 1monyh and half I had the Brochure

complete. One of the first goals for a Business Development Manager is the

networking. Do networking is maybe more easily, if you are an outgoing

person, but the result is more big. In fact if you do networking in the right

way, meeting people, be kind, contacting them some times to take care, you

could open really many doors, for you and your career. Is quite simple do

networking in Seoul, naturally the first step is to create your Business Card.

Everyone in South Korea has a Business Card, from the teenagers to the elders.

Is so easy because in Seoul there is a lot of networking party where you have to

take the largest number of Business Card. When I went to my first networking

party I took like 10 Business Card from the people I thought was incredible.

But now after 6 months I understood that every place is perfect to do

networking, and I started to select the people from their Business Card. Now I

could not live without my Business Card, because is became automatic give it

when I meet someone. The art to do networking is always present in the life of

a Business Manager. After these 2 months of scouting, I finished my Market

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Analysis and shared them with the Managers of my Italian Companies, to

study together the right way to proceed. In this work is fundamental the

support that the Managers of a company can do to the Business Development

Manager abroad. Fortunately I am always assisted by my companies, to send

my all kind of materials, updating and suggestions. Meanwhile my Database

was growing, and is still growing, so I started to select the best potential

partner in South Korea for my companies. Searching information about the

company, which brand already importer, is they are focused also in the

distribution, and so on. To be honest, from that moment I started to think that

I needed a Korean intern, to help me with the direct contact, before by phone

and email, with the Korean companies and an office in the one of the best

location in Seoul, because the location where you work in South Korea is really

important, also on your Business Card. So I requested the office to my

companies and I start to look for a Korean guy willing to do an internship for

me. I did also this, I found an office in a really nice building in Gangnam,

excellent quality/price, and I found a very kind Korean guy, Kang that he just

finished the Business School in Seoul and he needed his first work experience.

One of the best achievements that I could make was the following. We started

to work together in the same office calling the Korean companies, making

appointment to show our companies’ goods and sharing long time in the

office. By now we are arranging 3 agendas for my companies. In fact on the 6th

of November is coming the CEO of Maglificio Beby for the opening of the

Monobrand Store “Casheart”. We finally achieved and agreement with a

Korean distribution/importer company to open this store in Hyundai Main. In

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the 2nd week of November is coming the CEO of Florence Collections for a

week. We are organizing around 10 appointments with all the best showroom,

luxury furniture importer companies and famous architectural firms to show

them our company with all the presentations, the CEO and an interpreter.

And finally on the 3rd week of November is coming the Export Manager of

Monnalisa. With him, we choose together from my database the best Korean

importer and distributor companies for Kids Wear Brands and we are focusing

to arrange appointment with them. All this while I am writing the thesis,

above-mentioned tasks were so hard, but I liked the challenges.

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4.2 Interviews to Korean Companies

As I already write in 6 months I grown the connections with a lot of Korean

Managers, to be always update about all the news in the business field and for

all the tips that I need. So I thought was a great opportunity get interviews to

Korean Managers to ask directly to them how, a Foreign Company, can

penetrate the Korean Market, and which are the best way to do it. To have a

complete framework about this market, I thought it was better interview to

have 2 different kinds of companies, both specialized to import and distribute

Foreign Brands into the Korean Market, but in 2 different ways. One, STM,

more traditional, was based on the classical distribution by the luxury

Department Stores. The other one, BOXWELL & BANNERMAN projected to

the future with the cross border shopping, using the ecommerce channel to

sell everything directly B to C, naturally with a lower price. Below is the

interview.

STM – Importer & Distributor - Mr JAMES LEE, COO

1- What are the three main characteristics that a foreign product/service

should have in order to be successful in Korea?

“1) Brand history and potentials of brand 2) Design, Quality and Retail price 3)

Global Marketing”

2- According to your opinion, does the FTA between Korea and Europe play an

important role in boosting the number of exports and imports in Korea?

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“Yes, I do think the FTA is quite useful for import/export business. However, it

depends. Several items, which still need to apply 100% free of charge custom

taxes.”

3- Do you think that Korea is the most important trend-setter in Asia? “It is

true. Korea is geologically located in the middle of 2 important countries; China

& Japan. Japanese visits Korea to purchase products because of the retail prices,

in general, is reasonable. (Exchange rate)Chinese believes that "made in Korea"

products are generally high quality and cheap or reasonable prices. Moreover,

China is still communist country; therefore, importing taxes are really high.”

4- What are the difficulties that a foreign company may encounter when trying

to introduce a product in Korea? “There could be many of them. Above all, the

right selection of counterparty is really important. If you start to introduce a

product with a wrong buyer (or distributor), the reputation of brand will easily

crash down, and it will be really tough to rehabilitate the image of brand.”

5- What are the reasons why Koreans are so interested in European luxury

brands? “It is really complicated, however, I would say, Korean customers

believed high social class (honour +wealth) and history of luxury brands. Korea

is historically modernized in 50 years. Because of fast growing economy, those

people who are able to utilize capital want to show off their wealth. Nowadays,

the Korean market is changing a lot. Those people who have experienced luxury

goods, they are looking for high quality product and reasonable prices. The

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keyword of Korean fashion trend is -looking for a one-night stand lady-. In other

words, a Korean customer focuses on a well-designed & qualified product.”

6- What are the most important marketing strategies that Korean companies

develop in order to be successful in Korea?“ Global marketing, Celebrities

people, and use of social networks are key strategies for the market.”

7- The Department Stores are the best channels where you can sell your

products, but what do you think about the future sales channels?

“No matter middle and high retail prices, products need to penetrate the

Department channel first. However, less expensive products may find different

distributions such as malls, premium outlets, complex, and home-shopping etc.”

BOXWELL & BANNERMAN - Cross Border Shopping - Mr EDWARD KIM,

CEO

1- What do you think about the fashion market in South Korea? How are the

trends? What is the best way to penetrate this market? “Just like

in other countries, you can dissect Korean fashion market into many different

angles. As far as the consumer market is concerned, Korean people are known

to be very catchy towards the new fashion trend. For each age-target groups,

there are the leading fashion tiers. And it is very important to keep the eyes on

what these leading tiers are searching for when buying the clothes. The biggest

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fashion target group is obviously women in 30’s and 40’s. Because they not only

buy for themselves, but they shop for their kids’ wear as well as their

spouses. Their trends are very wide. However, because they are the most trend-

sensitive-yet-savvy shoppers, they look for the trendy fashion in the most

affordable prices. They get most of their trend from multi-medias, mostly, TV

and internets. Celebrity’s appearance on the TV shows is very influential to

these target group, as well as power bloggers’ posting on internet. These 30’s-

40’s women are different from 20’s where they are more fast-fashion

focused. 30s-40s are the age group that are achieving many things in life in

general. And their social status is driving them to buy and own better things

than the fast fashion products. There are many marketing channels and

methods in penetrating with fashion items to Korean market. Speaking for

those new foreign brands that are not yet built the awareness, it is important to

leverage their brand with something that they have in their local territories. All

information is being delivered via internet in Korea, more so through the huge

demography of smartphone users. Therefore, it is almost mandatory in using

the internet to spread the viral into Korean shoppers’ ears and eyes. Because,

building the solid awareness on the internet will allow for this brand to have

online contents when the Korean user searches the key words over internet. This

becomes the information pool for doing anything very special and expensive like,

opening up flagship stores, TV commercials, celebrity marketing, and so

on. Because, even if you air TV commercials, these savvy shoppers will go on to

portals like Naver, and will search your brands online to find out information. It

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will only going to maximize the sales conversion, if you already have the search

contents that the user wants to see and hear about your products.”

2- What are the main reasons why more and more Korean people choose to

buy almost everything by internet? “Last year alone, from overseas, there were

more than 10 million small packages came through Korea Customs. This is

reported from Korea Customs that major portion if of those international direct

buying from Korean consumers. Last year alone, expenditure from credit card

from these international direct buying exceed at 1.2 billion USD. As far as the

experience goes, 1 out of 4 online shoppers are experienced with this

international purchase. Now, analysis says that it is more than just a trend but

is becoming customer behaviours. The reasons are as follows; FTA between US

and Korea, as well as Europe and Korea is lowering the Customs tax from

individual importers (customers) and the list of Clearance item is more and

more extended. For instance, in US, if the total amount is less than $200 in

clothes and apparels, it’s free of customs tax. And the free customs tax line is at

$150 under FTA between Europe and Korea. Korean Government is allowing

Parallel Importing. Up until last year, if there is a Korean local distributor

contracted for brand A from foreign country, government would intervene as

they illegalize other companies to import the brand A. Korean government

announced this year that they are removing such regulation on parallel

importing. This is fuelling all other smaller shops and individuals to be more

active in importing the goods/brands. Korean shopper’s education level is at

highest. The main online shoppers in Korea are women in late 20’s to middle

40’s. They are career women or young moms that are very much educated in

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their pupil days. Many have gone through extensive English education that they

are not afraid to go to foreign websites and shop there. They are spenders rather

than savers. Our fathers and mothers were post-war generation that they were

diligent workers whom hardly shopper for themselves, but saved the wealth for

their offspring. This generation is not savers. They enjoy their lives with

shopping and travelling. Fashion trend in Korea is big and much more sensitive

than other countries. For instance, past two years’ winter, Canada Goose and

Mont Claire’s goose padding jackets were sold so much, that you can easily spot

same padding jackets on the busy streets of Seoul. Also, TV drama and K-pop is

big enforcer of fashion and beauty. Any clothes they wear in Drama, it will be

most likely sold out the next day. Not only are they fashion sensitive, many are

very smart shoppers. They are very accustomed to internet life, searching for

shopping items in internet is very common. (And the local portal such as Naver

is providing the well-tailored service in this regards.) They are highly fashion

driven, and they are looking for the cheapest and most savvy ways to purchase

such items.”

3- Do you think there are still some negative aspects bound to the increase of

the cross border shopping in South Korea, in Europe and in general in the

world? “There had been the negative aspects in cross-border shopping for over a

decade like logistics, duties, VATs, return issues, customer service issues, and

general inconveniences from buying items overseas. However, these issues were

not just yesterday’s. These issues have always been in the industries, yet the

cross-border shopping grew and is growing ever fast in recent years. The major

driving force on this growth despite the negative aspects is no secret. It is a

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simple fact that people’s desire is always greater than the rules. The simple facts

on shopping is finding things you want to buy and buying it cheaper. And with

the help of modern technology and education level, the shoppers are smarter

than ever and most active than ever. They are finding the brand and clothes over

internet, and find the prices they are willing to pay, and choose the shipping

methods of their preferences, and pay the duties and VAT via bank wire through

smartphone apps. All of these actions used to be the justification cost for

distributors when they raise the price in local market. Now, the users are truly

making their own prices.”

4- What do you think about the future scenarios in the South Korean Fashion

Market? “I believe more and more new brands will come in the next a few years

into Korea. Because introducing a brand into Korea is no longer limited to those

big distributors. Before finding a local distributor, a brand can work to build

their awareness in Korea with far less spending. And also it is highly likely that

the fashion brands will be able to find their ways into greater Asia by launching

their brand in Korea. With the help of K-wave, many Korean pop

culture/contents will drive fashion items into neighbouring countries like China

and Southeast Asia. If Korea can prepare its home as a platform to many

brands, I believe Korea can be the hub for fashion in Asia as well as strong

launch pad to new sales for the brands.”

5- What are the three main characteristics that a foreign product/service

should have in order to be successful in Korea? “1) will be “Openness” and

being ready to accept that the industry is in a different DNA now. Korea is a

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fast-paced society. And it is also the same when it comes to fashion

market. People are adapting new trend very fast, in not only the fashion tastes,

but also the way they shop. I have met many European clients and partners, but

sadly to speak that they expect to see similar environment as they would in their

own home country. It is different. And Korea is usually ahead as far as the

consumer behaviours are concerned.2) will be -Doing it smart-. There are many

diverse ways you can promote and sell your brands in Korea. Traditional

method in choosing a distribution partner who will import the cargo, and

distributing it in Korea is good when you find the partner who cares about your

brand, not just the margin from the sales. But many cases are that these

distributors are never responsible in building someone else’s brand with their

expense. So, what normally happens is that the sales may happen, but the value

of brand is fallen to the ground. The company who owns the brand should be

diligently studying the market, and to manage their brand in Korea. If not, hire

a trustworthy partner to manage the brand-building.3) will be -Patience-. Please

know that it will take time to build healthy level of brand awareness. There are a

few quick ways to raise the name of your brands in Korea. Although sometimes

it is needed, it only performs for the short period time. We need to have

continued communication with Korean consumers in very healthy ways. With

different brand campaigns and promotions, and depending on some factors, the

brand will either be the trend setter in Korea, or at the very least it will catch up

with the fashion trend. It may get done in weeks or the months depending on the

brand’s efforts. But once it is built on the solid ground, it will generate strong

revenue stream for the brand in coming years.”

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4.3 Potential Scenarios

If someone had asked me more than 3 months ago, about the “Potential

Scenarios” of “Borgo Italia” in South Korea, my answer would be always the

same: continue growth. When my companies, before the end of my internship,

confirmed me in Seoul for other 6 month, I corroborated my ideas about the

Consortium, the Director Lucia Fanfani and the President Piero Iacomoni.

Their volition to continue with me in South Korea, for all my efforts and good

job in these months, filled me of pride and willpower to do always better. By

now my main goal is to find a Korean company Partner for all my 5

Companies. Yes because to come into the South Korean Market you need a

local Partner to manage your distribution and marketing. The current

situation shows that for “Casheart” the cashmere brand we start to open a

Mono Brand Store in Hyundai Department Store, and in the next future open

also in the others Luxury Department Stores. It was a long negotiation

between the Italian company and the Korean company partner, that I making

sure, being always in contact with Italy and Korea with email and conference

call anytime. But I am so proud for my first achieve. In the second week of

November, the CEO of my furniture company will come in Seoul. I am

organising for him an agenda full of appointments, with the best Korean

furniture showroom and Architectural firms interested to have a meeting with

my CEO. The phase to contact and explain the products, it is not so simple.

For this in fact Kang, my intern, was an incredible resource, calling all the

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companies and try to sell them our products, and also to help me in the

resource of potential Korean partners through the Korean browser: Naver. We

are using the same way for my other company of children’s wear. The Export

Manager is coming in the third week of November, and we are organising the

agenda also for him. Naturally in the agendas one of the import things is fill

the empty time in day between an event and the other. Like fixing visits to see

place where the people can see the market potential, like the best Department

Stores, Shopping Streets, Showroom and Flagship Stores. This is what we are

doing currently. The philosophy of “Borgo Italia” is explained in Borgo Italia’s

logo. It has seven points to honour the seven arts that made Florence great.

“Le Arti” was the medieval organization comprised of all economic activities in

the different cities in Tuscany. It ranged from commerce to finance, and the

different crafts, particularly the sectors of textiles and precious metals. Borgo

Italia strives to bring back the unified spirit of the olden times in order to

spread our values of style and quality around the world. The Borgo was the

centre of every Italian city; it was the meeting place for the populace and the

site of cultural and commercial exchanges. “Borgo Italia” aims to bring a

corner of Italy into the best city in the world. So from January I will continue

all of my work that I am doing here, expanding my range also in Japan and

Singapore, where my companies have a lot of interest. The action plan will be

always the same, understand the Market, do networking, find local importer

and distributor and contact them to show my companies and try to find a local

partner. After when you start to travel and know new country and different

culture with a job that you love, you cannot stop anymore. I like this kind of

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job and I will continue to do always better. My final goal for Borgo Italia would

be to open a showroom branded “Borgo Italia” in one of the best shopping

street in Seoul. My idea is to combine all the brands interested to come in

South Korea in a new and fashionable concept store20, where the costumers

can come inside and relax themselves, in a huge and beautiful sofa’, drink the

best espresso that you can find in Seoul, look all the new collections of our

products, for man, woman, children and home. In others words make them

feel pampered and let them an amazing “Italian” experience. Inside Borgo

Italia there are all the perfect companies to combine this. And I will do my

best to achieve this goal, for me and for them.

20

Concept store is a retail store that goes beyond simply selling products and instead appeals to a general sense of

lifestyle by offering products to match the desires of those involved in a particular social scene. Rather than simply offering a selection of standard products for purchase, this type of store sells products that appeal to a particular

segment of consumer.

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Bibliography

James B. Lewis, Amadu Sesay: “Korea and Globalization: Politics,

Economics and Culture”, Routledge, 2013.

Young-Iob Chung: “South Korea in the Fast Lane: Economic

development and Capital Formation”, Oxford University Press,

2007.

Valentina Marinescu: “The Global Impact of South Korean Popular

Culture: Hallyu Unbound”, Lexington, 2014.

Jonas Hoffmann, Ivan Coste-Maniere: “Global Luxury Trends:

Innovative Strategies for Emerging Markets”, Palgrave Macmillan,

2013.