Parasites? This country is in first place in purchasing luxury brands

Luxury accessories (unsplash photo)

Whether it’s Italian leather Prada bags or classic British Berber trench coats, South Koreans are the world’s biggest spenders on personal luxury goods per capita, according to Morgan Stanley.

The investment bank estimated that South Korea’s total spending on personal luxury goods would increase by 24% in 2022 to $16.8 billion, or about $325 per capita. That’s far more than the $55 and $280 per capita spent by Chinese and American citizens, respectively, according to Morgan Stanley estimates.

The Moncler brand said that its revenues in South Korea “more than doubled” in the second quarter compared to the period before the corona epidemic. The owner of the Cartier brand, said Korea was among the regions where sales grew at a double-digit rate in 2022, compared to a year and two years ago.

Morgan Stanley analysts explained that the demand for luxury goods among South Korean buyers is driven both by an increase in purchasing power and by the desire to demonstrate social status to the outside world. “Looks and financial success can resonate more with consumers in South Korea than in most other countries,” analysts wrote in the report.

More in-

The phenomenon of “shuponi” is more common in Korean society. A McKinsey survey found that only 22% of Korean respondents see the purchase of luxury goods as bad taste, compared to 45% of the Japanese and 38% of the Chinese.

Demand for luxury goods is also supported by the increase in household wealth. Bank of Korea data shows that the net worth of households in the country rose by 11% in 2021. About 76% of household wealth in Korea is in real estate, the prices of which have risen significantly since 2020.

The investment bank also noted that luxury houses have recruited Korean icons and celebs to further boost demand. “Almost all major Korean celebrities are brand ambassadors for the leading luxury houses,” the report noted.

Unrealized potential in China

Still, Morgan Stanley said the booming Korean luxury market is a “good preview” of what the Chinese luxury market could become. The analysts said the two countries share similarities in their inclination towards luxury items as status markers.

Currently, South Korea’s annual per capita spending on luxury goods remains six times higher than that of the Chinese.

Worldwide, McKinsey forecast the luxury market to grow between 5% and 10% in 2023, buoyed by demand from the US and China. “We expect growth to resume after China recovers from the current corona waves, which should happen by the end of the first quarter,” Xing said.

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