Imports of luxury items into Korea hit record high $10.6b

PHOTO: Imports of luxury items into Korea hit record high $10.6b

SOUTH KOREA - Imports of luxury items such as premium brand clothes, handbags and cosmetics hit a record high US$8.6 billion (S$10.6 billion) last year despite the reeling economy.

Imports of the five main nonessentials -- luxury brand clothes, watches, golf clubs, handbags and cosmetics -- gained 2.93 per cent compared to 2011, the Korea Customs Office said on Sunday.

"The growth rate (of imports of the five nonessential goods) fell far short of the 34.25 per cent increase in 2011, but considering that the Korean GDP grew only 2 per cent last year, consumers' preference for foreign labels did not ebb," KCS official said.

Over $6 billion or 70 per cent of last year's imports of high-end goods was clothing.

Handbags rose by US$50 million to US$952 million, while cosmetics gained US$20 million to US$883 million.

Imports of golf clubs, on the other hand, dropped by US$25 million to US$245 million.

Presuming the demand for luxury items will not dip this year, the KCS said it will intensify customs duties inquiries on multinational companies that are suspected of evading tariffs as they import expensive consumer goods.

The KCS plans to look into the appropriateness of their reported tariffs, foreign currency trading, whether they received excessive tax returns or unfair tax cuts, or violated import-export rules.

Meanwhile, local department stores are set to introduce more premium watch brands as sales jumped last year thanks to growing demand from professional men and Chinese tourists.

Sales of imported luxury watches such as Rolex, IWC and Breguet surged 20.6 per cent at Lotte, 26.3 per cent at Hyundai, 18 per cent at Shinsegae and 38 per cent at Galleria last year.

These watches are priced from millions of won to tens of millions of won per piece.

"Consumers with great interest and knowledge in foreign premium watch brands increased," said a clerk at a luxury watch shop.

"People used to purchase watches for wedding gifts at around 5 million won (S$5,700) on average until a few years back, but now it has gone up to between 10 million and 15 million won."

In addition to professional men's greater appetite for luxury, Chinese tourists have emerged as the main customer of high-end watches.

Chinese purchases of high-end watches climbed 15 per cent at Lotte Department Store last year. At Galleria, Chinese accounted for 10 per cent, up from 4 per cent in 2011, of jewelry and expensive watch sales.

"Because the Chinese can buy premium watches about 30 per cent cheaper than in China by getting tax refunds, many look for new arrivals and the most expensive products which they can't find in duty-free shops," said another industry official.

Lotte Avenuel's 1,650-square-meter watch arcade on the second floor, the country's largest which opened last year, is scheduled for a renewal. Six new brands including Vacheron Constantin, Blancpain and Omega will be added.

The COEX branch of Hyundai Department Store also plans to expand the space for high-end watch shops by about four times to 858 square meters. Ten new brands including Audemars Piguet, Breitling, Jaeger-LeCoultre, Piaget and Blancpain will be added to its current lineup of six.

The main Hyundai Department Store in Apgujeong will open independent boutiques for Jaeger-LeCoultre, IWC and Panerai next month.

Shinsegae Department Store is set to open Burberry Britain, Rado and Longines shops in its Gyeonggi branch late this month.

Galleria already increased the number of high-end watch brands to 21 last year. It plans to have an exclusive concierge for jewelry and watches to offer one-on-one consultation service for customers within the first half of this year.