Globalization coupled with international stability in business and improved regulations by World Trade Organization (WTO) has seen countries and individuals increase the earning capacity from global business activities. The success in the world of business is driven by the ability to control costs of operations, appropriate pricing and product design to ensure competitiveness. However, government policies play a critical role in determining the business environment of any given country. The technological inventions and the focus on e-commerce have revitalized business operations in the global market by providing a larger variety of products as well as expanding the market for corporations. There is an apparent shift of the global business from a mass-production to a mass-consumption economy. Brands have developed and expanded their presence by utilizing the online business platform where consumers across the globe can order products and get them shipped to their doorsteps from stores worldwide. Merchandizing has also transformed international and local trade by allowing for the presence of big brands in countries leading to industrial competition as well as exposing consumers to a larger pool of quality products to choose. Government policies, consumption patterns and the citizen’s purchasing power determine the level of trade and the industrial growth through in nations. This research paper will analyze the economies of South Korea and the impacts on the country’s fashion industry.
South Korea’s Economic Growth
South Korea is depicted among the global fastest growing economies. The country’s fiscal policies are depicted as the strengthening points that have allowed the nation’s industries to maintain a competitive advantage against the multinationals. South Korea’s regulatory measures have seen the exports of the country increased by 15.8% according to the country’s trade ministry. Also, South Korea’s annual trade according to data from January 2018 indicates a surplus of $96 billion. It is evident that South Korea is enjoying a period of economic growth which also reflects in the country’s consumption of both the local and international brands. With a consumer price index of 1.4% as at February 2018, South Korea is also depicting a sustainable ability of its population to purchase consumer goods and luxurious products (Reuters, 2018).
The data from South Korea’s economic growth form a basis for the analysis of its merchandising and fashion industry. Fashion is always internationally inspired in that; local clothing and accessory designers manufacture products that can compete and sale against international brands. The economic growth in South Korea has implications that are deemed to shift the environment in the fashion industry. Increase in the capital base resulting from the surplus in the annual trade allows the country’s citizens to invest more in the local and the international market. Also, the favorable balance of payment represented by the positive values from exports and imports increases the people’s relative purchasing power due to the availability of disposable income resulting from trade in the international economy. The government policies including the maintaining of the country’s interest at a record low of 1.25% have attracted international fashion brands in the country by ensuring that the cost of credit is low, and also, the local companies in the fashion sector can access capital for business at affordable rates (Reuters, 2018).
The merchandising policies and processes in South Korea have been affected by the production and level of economic activities within the country and the Asian region. The expanding regional production has seen South Korea decrease its dependency on the United States and incline towards China. South Korea which is the 7th largest export economy in the world has China as its top export and import destination. The merchandise export in South Korea has mainly manufactured goods including fashion products. The merchandise tariff policy adopted by South Korea is derived from the World Trading Organization commitments. South Korea imposes a 7.5% tariff on manufactured merchandise. However, the world trading organization has noted South Korea to implement non-tariff barriers and technical barriers to trade through levies, quotas, sanctions and embargoes. The bottlenecks in South Korea’s merchandise processes and policies have protected the country’s fashion industry from foreign domination. The legal system and South Korea’s government have therefore restricted the nation’s fashion industry through its policy formulations on imports and merchandise at large (Choi et al., 2017).
South Korea’s Fashion Industry
In 2017, the fashion industry in South Korea was projected to increase by 3.3% from the figures posted in 2016. The growth of South Korea’s fashion industry was centered on the country’s apparel manufacturers who are seeking to increase their industrial footprint. Also, the growing economy and the relative income capacity of the South Koreans is providing a substantial market for the fashion industry players. Data from the Samsung Fashion Institute indicated that by 2017, South Korea was recording increase in the fashion sector for the fourth consecutive year. However, the report as per the Korea International Trade Association depicts that the country had huge import-export parity in the fashion industry. Clothing imports in South Korea in 2017 were $8.33 against the exports which totalled to $1.89 thus creating a trade deficit in the sector (Fibre 2 Fashion (firm), 2018).
Diverse fashion and merchandise companies operate in South Korea. Well, known fashion brands from South Korea include KYE which was founded by Kathleen Kye in 2011. KYE is focused on sports-luxe aesthetic with customers from across the globe. Charm is another international fashion brand from South Korea. Charm features matching clothing and accessories seen in logo t-shirts, jackets and even iPhone cases. Charm has stores in South Korea and other countries including a store in Fig, Brooklyn in the United States. Gentle Monster is another international brand from South Korea which opened its first North American store in SoHo and deals in modern aesthetics including sunglasses priced in the range of $300 and $400 (Allure, 2018). International merchandising companies also exist in South Korea. The Beaucre Merchandising Co. Ltd is a South Korea based company which deals in retails, designs and the distribution of apparel and accessories within South Korea and China. Beaucre Merchandising Co. Ltd provides women’s fashion and casual wear as well as men and women accessories in its stores. Beaucre Merchandising Co. Ltd exports products to its customers in the United Kingdom, Italy, Spain, France and the United States among other countries (Bloomberg, 2018).
Conclusion
A country’s economic status plays a critical role in attracting international brands as well as developing local industries. There is a need for governments to device policies that prevent dumping as well as enhancing the international competitiveness of the nation’s exports.
References
Allure. (2018). Korean Fashion Streetwear to know. (online) Available at https://www.allure.com/story/korean-fashion-streetwear-brands-to-know. Accessed March 9th, 2018
Choi, J., Kwon, H., " Koo, M. G. (2017). The Korean government and public policies in a development nexus. Vol. 2. Sustaining development and tackling policy changes. Cham: Springer International Publishing.2017
Fibre 2 Fashion. (2018). South Korea's fashion industry to grow 3.3% in 2017. (online). Available at http://www.fibre2fashion.com/news/fashion-news/south-korea-s-fashion-industry-to-grow-3-3-in-2017-204182-newsdetails.htm. Accessed March 9th, 2018.
Reuters. (2018). South Korea keeps rates unchanged, flags policy caution. (Online). Available at https://www.reuters.com/article/us-southkorea-economy-rates/South-Korea-keeps-rates-unchanged-flags-policy-caution-idUSKBN1F705B. accessed March 9th, 2018.
