The perfect match
16 April 2013Markets
South Korea is a rapidly advancing country where consumers gladly pay extra for quality and social status. Also, the country has a tradition for wearing fur in the cold winters. Kopenhagen Fur has entered a lucrative market, offering great potentials both now and in future.
Seoul, the capital of South Korea, Wednesday 19 December 2012, 10 am in the morning. It is the day of the election of the new president for the next five years. This being the case, many South Koreans have the election day off, but the polling stations are not the only places that people flock to.
Outside the Hyundai Department Store, South Koreans - mostly women - are queuing shuddering in the minus 10 degrees Celsius, the early queue stretching from the entrance to the kerb. As the opening of the department store at 10.30 am is approaching, the queue extends down along the four-lane boulevard in one of Seoul's most expensive districts. At a first glance a model example of queuing culture, but people run out of patience when the Hyundai Department Store opens its doors.
Chaos on the escalator
Whether people are fixated on getting to the best articles first or merely wish to get inside into the warmth of the department store is impossible to say, but the neat queue breaks up quickly. Instead, everyone hot-foots for the entrance where too many try to squeeze through the too narrow doorways.
Inside the Hyundai Department Store, the commotion reaches new heights. On their way up the escalator, people from the main entrance run into more customers coming from the underground car park. As a result, the escalator is overloaded, and people are completely unable to move for the next five minutes until shop assistants manage to shepherd them up the escalator so they can throw themselves into shopping on all 10 floors.
Senior researcher Geir Helgesen is director of the Nordic Institute of Asian Studies at the University of Copenhagen. He has been studying South Korea for 30 years, staying in the country on several occasions. He explains that the propensity to shop in the expensive department stores is characteristic of private consumption in South Korean cities.
- South Koreans prefer shopping in the shops in the department stores where the staff bow and carry their purchases to the car. In South Korea, consumers are willing to pay extra for a high level of service, says Geir Helgesen.
Looking for the best
Another reason for consumers' penchant for department stores is South Koreans' focus on quality. These are the words of Ahn Jang-Hyeon, team manager in the Hyundai Department Store's purchasing department. For 22 years, he has been carving out a career by having his finger on the shopping pulse and assessing what consumers will take a liking to in the Hyundai Department Store's total of 11 department stores.
- South Koreans are very aware and critical of their private consumption. Quality means a great deal to us - also when it comes to fur. I see a potential for incremental sales, especially of high-quality furs like the ones supplied to the market by Kopenhagen Fur, says Ahn Jang-Hyeon.
Park Geun-hye, daughter of a former president, won the presidential election on 19 December 2012. This means that South Korea, like Denmark, has a female head of state for the first time. That is not the only similarity between the two countries. South Korea's positive developments since a financial crisis in 1997 have spread into the welfare-state population, and, according to Geir Helgesen, this has established a broad middle class with a huge appetite for private consumption. That paves the way for a large market for high-quality products.
- Eighty per cent of the 50 million South Koreans define themselves as middle class. This means that they spend a large proportion of their purchasing power on displaying status through lifestyle. They want only the best so Kopenhagen Fur should also stand a chance of entering the fur market, he says.
"Everything furry is popular"
Offhand,South Korea sounds like a lucrative market for Kopenhagen Fur to gain a foothold in, and, according to Ahn Jang-Hyeon, team manager of the Hyundai Department Store's purchasing department, this is in fact the case in a country where temperatures in January rarely rise above freezing point. South Korea has a tradition for fur, and young women express interest in buying their first fur coat at a younger age than previously.
- A fur jacket or a fur coat can be a huge investment for young women, but then they start out by buying jackets with fur collars or fur accessories like gloves. Roughly speaking, everything furry is popular, says Ahn Jang-Hyeon.
According to Torben Nielsen, CEO of Kopenhagen Fur, entering the fur market in South Korea and being able to communicate the knowledge of mink fur coats of the highest quality are a giant breakthrough.
- The South Korean market is an unattainable dream for the vast majority of producers in western countries. The fact that we relatively quickly won the trust of a significant player like the Hyundai Department Store while other players have also approached us indicates that our high quality is exactly what the South Korean consumers are looking for, says Torben Nielsen.
Jesper Vibe-Hansen works for the Danish Ministry of Foreign Affairs and, on 1 August, he will be taking up the position as deputy manager and head of the commercial department at the Danish embassy in Seoul. He is looking forward to returning to South Korea and the Danish embassy, where he worked between 1991 and 1994.
- South Korea has moved up around the top 15 of the greatest economies in the world. In the course of the coming years, growth at 3-4% is likely, an impressive achievement for an established industrialised country these years, says Jesper Vibe-Hansen.
Since his first stay in the country, he has been keeping an eye on South Korea's development, e.g. from the Danish embassy in neighbouring Japan from 2007 to 2012, through his job for the Danish Trade Council as adviser to Danish businesses. Jesper Vibe-Hansen sees great potentials in a country that has really opened up to the world.
- South Korea has a large and deep-pocketed population who wants to display its affluence. In combination with the free trade agreement concluded with the EU, which regularly lowers customs and import duties strongly until 2017, this makes South Korea a lucrative market for Danish export businesses, he says.
Peter Wad is associate professor at the Department of Intercultural Communication and Management at the Copenhagen Business School. He studies developments in East Asian countries and, like Jesper Vibe-Hansen, he sees several signs that South Korea will continue to experience economic growth also in future. Especially for the women accounting for the lion's share of fur consumption in the country.
- South Koreans are a hard-working people with a high level of education. This also applies to the women, who, from an international perspective, stand a good chance of having a career. The newly elected female president serves as a good role model even though she also comes with solid political heritage as the daughter of former president Park Chung Hee, says Peter Wad.