Austrade - South Korean TCF market

AUSTRADE SOUL BUSINESS DEVELOPMENT MANAGER YOUNG MI GIVES ASPIRING EXPORTERS THE LOW DOWN ON THE SOUTH KOREAN TCF MARKET.

What you need to know
The market for imported fashion and other luxury goods has only been liberalised in South Korea since 1997. Having had a taste of Western fashion for the past decade, shoppers are much more sophisticated and discerning.

By 2009, the South Korean apparel retail industry is forecast to be valued at $US14.5 billion ($A16.4 billion), an increase of 23 per cent since 2004, according to Datamonitor. About 30 per cent of this market is imported goods, with almost 150 international fashion brands now licensed in Korea, a 13 per cent annual increase since 2006.

Koreans are recognised as one of most fashion and beauty conscious people in North East Asia and have proven to be a lucrative market for Australian fashion. Most Korean consumers generally pay close attention to the country of origin of a product when evaluating quality and making purchases. With Australia's clean and green image, in association with good product quality, Australian concept beauty and fashion is booming in Korea. The door is now widely open to more Australian fashion companies, with Helen Kaminski's huge success and Galleria Department Stores now carrying Tsubi, Insight and Alice McCall.

Business opportunities
Sales of imported apparel have been increasing in all segments, not only top-end luxury brands but also mid-priced brands. The average target age of consumers for imported apparel is decreasing, from people in their 30s and 40s to people in their 20s.

Large department stores are expanding shopping space for imported high-end apparel brands, while smaller department stores are targeting shoppers with mid-priced brands.
Specialty imported apparel shops are selling multiple brands at a lower price than department stores, increasing the popularity of imported apparel.

There are also opportunities online, with women's outerwear and underwear increasingly sold through internet shopping and also TV home shopping. These distribution channels are growing share as they respond quickly to fashion trends. However, one downfall is the high rate of product returns.

Do your homework
Even if a brand is Australian, there may be difficulties penetrating the market if the product is made in China or South East Asia. Country of origin labelling is required for all commercial shipments entering the market.
Agents normally purchase items six months prior to product display and timely reorder is nearly impossible. Customs duty on apparel is 13 per cent and there is also a 10 per cent Value Added Tax on all goods.

Dealing with trade
Department stores and home shopping companies do not purchase direct from suppliers, so a sales agent or distributor is required. In most cases, exclusive sales agents have the role of both importer and distributor for brand apparel. Another approach is to establish a flagship store, then after around 12 months approach a department store to request space allocation, using flagship store sales as
evidence of the brand's appeal.

Austrade is hosting a showcase event to promote Australian fashion to key Korean fashion buyers, distributors and retailers in January. A similar event held at the start of this year saw Australian designers Tsubi, Bora, Willow, Amar and The Red Queen make significant sales and gain valuable exposure in the Korean market.

By Young Mi