Korean consumers begin to demand fair deal on imports

When it comes to makeup, 28-year-old office worker Lee Yu-na prefers foreign brands like SK-II, Dior or La Mer instead of Korean brands, especially cheap ones.

“Foreign cosmetic brands have a longer history compared to most Korean brands and have been appreciated by women all over the world. It is the company, not the separate brands, that I consider before my purchase, and small companies like those that make cheap local brands seem unreliable,” she said.

“I would go for the more expensive one if they are presented to have the same effects, because it is for nothing other than my skin. I assume that the price must be higher because it contains better ingredients.”

Korean consumers have become more generous in spending for themselves, and are drawing more attention to foreign everyday goods than ever. 

Korea is among the top five selling countries for global cosmetic makers like Estee Lauder Companies, and takes up 30 percent of the pricy Norwegian stroller brand Stokke’s total sales in Asia. U.S. retailer Costco, which mainly sells imported goods, marked a 130.8 billion won ($118.2 million) operating profit here last year, a 51 percent rise from 86.4 billion won in 2009.

Consumers faithful to foreign brands

Explaining that the Norwegian brand’s sales here are growing by an average 50 percent annually, Stokke Vice President Asia Pacific Eva Hedberg pointed out in a press conference held in Seoul in May that Korean consumers understand the brand’s focus to produce durable “premium” strollers.

For some mothers doing the best for their babies simply means furnishing their kids with pricy imported strollers.

Online forums popular among moms and moms-to-be, such as Momsholic (cafe.naver.com/imsanbu) or Remonterrace (cafe.naver.com/remonterrace) which have over 1.7 million and 1.9 million members, respectively, are flooding with questions on imported strollers like Stokke, Quinny or Orbit.

“Perhaps it is because I am expecting my first child, but I want to give my baby the best I can. The criteria for the ‘best’ is not the price, of course, but I do believe that expensive strollers would be worth it, if the advertisements are true,” said a member of Momsholic who uses the ID Jams.

“Imported strollers take up about 80 percent of the total sales of strollers (in terms of turnover),” said a buyer of nursery goods at a local department store who wished to stay anonymous.

Stroller imports skyrocketed since the past decade, from barely $2 million in 2000 to over $53 million last year.

Like Lee, many Korean women who wish to give the best for their skin tend to rely on foreign brands as well.

According to a recent survey conducted by Seoul YMCA last month, 67.3 percent among the 519 women answered that they expect imported cosmetic products to have good quality despite the expensive prices, and 48.5 percent said that they want to invest in their skin even if it takes a fortune. Among the total, 92.7 said that they think imported cosmetic goods are expensive.

Overpriced products

Controversies are rising, however, as it turns out that most imported goods are disproportionately expensive in Korea.

According to a recent research by Consumers Korea, strollers made by foreign companies are sold here at double the price on average than the country of origin.

Italian brand Cam’s Pulsar model is sold at 1.98 million won here, but at about 978,900 won in Italy. U.S. brand Orbit, which gained popularity here after top actress Ko So-young was spotted using it, is priced at 1.45 million won here, which is 58 percent more expensive compared to that in the U.S.

Recognizing the public sentiment, some brands recently lowered the consumer price a little bit. Stokke, for example, lowered the price by 11 percent in May, from 1.89 million won to 16.9 million won, after criticism that it was being sold at prices up to 70 percent higher than in other countries.

“Imported stroller brands have exclusive importers and sellers. The exclusive distribution channels and Korean consumers’ unreasonable preference for imported strollers results in expensive prices,” Consumers Korea said in a statement.

“I don’t understand why only Korean consumers have to pay a bigger price for the same stroller. One of my friends took the pains to purchase a stroller in the U.S. during a business trip,” said Jang Jae-hyeok, a 30-year-old office worker whose wife is expecting a baby due next May.

Others blame Korean consumers who pay the price for expensive imported goods no matter what.

“It is natural for the companies to make a profit. The problem is that Korean consumers still buy the products. The over-developed online cafes and the typical face-saving culture here is resulting in the most useless consumption,” said Kim Yoon-mi, an office worker who is expecting in December.

Cosmetic goods are much more expensive here as well.

Seoul YMCA announced last month that makeup products by major international brands were sold most expensively in Korea out of seven different countries, after comparing 2011 prices of 36 products of the top 10 brands including Estee Lauder and Lancome.

When comparing prices based on purchasing power parity, an index to determine the relative value of currencies and purchasing power in different countries, Estee Lauder’s Advanced Night Repair Synchronized Recovery Complex, for example, was sold at 155,000 won in Korea, 65 percent more expensive than in the U.S., 94,099 won.

Public sentiment sway over disappointing behavior

Disappointing qualities or unacceptable business ethics of foreign companies are triggering more complex love-hate sentiments for some Korean consumers.

“I felt as if we (Koreans) were the subject of a scientific experiment,” a member of Remonterrace wrote about P&G’s newspaper advertisement this month reading that “Millions of Korean consumers like you are safely using Downy.”

The ad was in response to an announcement by Consumers Korea that glutaraldehyde was found in some of the brand’s fabric softeners at concentrations of 98 milligrams per kilogram.

This was far below the legal limit of 250 grams per kilogram, but Consumers Korea pointed out that there was no glutaraldehyde in the U.S. product and that it was better to exclude non-essential toxins, even if they were within legal limits. Meanwhile, consumers are left confused and enraged, and still inquiring about refunds.

According to a recent report by the Consumer Times, most foreign cosmetics brands including Shiseido or Shu Uemura do not sell consumable supplies like the rubber part of eyelash curlers in Korea, which should be replaced after several months of use. The items, however, were sold at shops overseas.

“Consumers should be able to make wise decisions if such cosmetic companies are unreasonable enough to discriminate Korean consumers from others,” said an official at Seoul YMCA.

The recent war between Costco and Seoul Metropolitan Government has further tainted the image of foreign companies, as the growing public sentiment is that the company is ignoring local laws and acting inethically.

Luxury brands have also been criticized for their after-sales services and the level of donations made to Korean charities.

“For long-term growth in Korea, foreign companies should become a publicly respected companies by making investments and donations here,” said Cho Myeong-heon, a professor of business administration at Korea University.

By Park Min-young  (claire@heraldcorp.com)