So you want to expand into China, Japan, Korea, Southeast Asia (Asia)? We here at IPG suggest considering Seoul, Korea as a Test Bed for your Asian expansion. The following article’s focus is on Luxury Goods and Fintech, but IPG believes that the Korean Market is, also, an excellent stepping-off point for other industries including F & B, Defense, Franchise, Automotive, High Tech, New Tech, Retail, and Fourth Industrial Revolution industries. Another article that may be of interest, that we posted a few years back, is an article on Using Korea as a Test Market for Asian Expansion: The Facebook Example. If you have any questions, we are always here for a consultation.
Korea as a Test Market/Test Bed for your Company’s Asian Expansion
Many savvy companies have, successfully, utilized the Seoul, Korean market to test the Asian waters. For example, luxury powerhouse, Louis Vuitton, opened a uniquely designed flagship boutique in Seoul in late October of 2019 (Louis Vuitton Opens Frank Gehry-Designed Seoul Boutique). Additional brands that have made significant investments in Korea include Mulberry, Givenchy, and Delvaux. These brands, often, utilize Seoul as a means to test designs, advertising campaigns, and fashion trends for other Asian markets.
Additionally, the Korean government has, gradually, loosened its grip on the economy by allowing the increasingly creative youth to run with cutting-edge ideas. For example, Mr. Dae-young KWON, the director-general of the Financial Innovation Bureau at the Financial Services Commission, announced its new “regulatory sandbox” and “test bed” policy for fintechs.
Reasons why the Seoul, Korean Market is an Excellent Test Bed for Asian Expansion
- Failure is often quicker and cheaper to realize since many other Asian countries are larger, more costly to do business in, less transparent, and comprise multiple markets. Failure in Seoul, is, typically, a sign of future failure throughout Korea, East Asia, and often Southeast Asia without a significant change in approach. While many companies muddle along in China for decades, not even realizing the company is failing, in Seoul the reality, often, is made apparent much quicker.
- Koreans are fashion-conscious, tech-conscious, and often leaders in technology and fashion trends in Asia. The consumers are, often vocal about likes, dislikes and quick to follow trends. A small ripple in a market can lead to an avalanche of sales or an avalanche of snow on your head.
- Korea is a favored destination for Chinese, Southeast Asian, and Japanese tourists. Your product is not, only, in the eyes of Koreans. For example, McKinsey & Company noted:
- “… Korea is an attractive market, not only because of the spending power of its consumers, but also due to the country’s status as a popular holiday destination for other Asians, in particular, Chinese consumers, which account for over $500 billion yuan (USD 73 billion) in annual spending, representing almost a third of the global luxury market.”
- For those in the fashion business, other Asians tend to be of a similar size, thus, products tailored to Koreans, also, fit other Asians.
- Paul Alger, director of international business development at the UK Fashion and Textile Association (UKFT), says larger brands find Korea is a good stepping stone into China because of the close cultural links but also similarities of shape and size – Koreans tend to be of a similar body shape and size to the northern Han Chinese.
- Major players are utilizing Korea as a test bed. For example:
- Marvel launched its debut film for Avengers and Spiderman in Korea.
- Unilever & P&G launched numerous products in Korea with many being scrapped and others expanding globally. Unilever & P &G, also, consider Korean consumer surveys essential for these companies’ Asian businesses.
- Game company Blizzard’s primary test bed is the Korean market.
- Dole, Nestle, and Starbucks debuted products in Korea. Many of these products were expanded globally and/or in Asia.
- Microsoft, Google & Intel test products in the Korean market.
If you are interested in more information on expanding into Asia or the Korean market, we suggest setting up a call with IPG.
