Koreans Pay Dearly for Their Label Addiction

Koreans have become the favorite customers of global luxury brand makers, following closely behind Chinese customers and replacing the Japanese in the labels' affections.

But Koreans are paying excessive prices even by the inflated standards of the trade. European luxury labels sell handbags in Korea for some W4.65 million, while the same products cost around W3 million in the U.S.

After the Korea-EU free trade agreement went into effect in July, tariffs of 8-15 percent on imports from Europe were lifted, but the price tags of luxury products mysteriously remained the same or even went up after the labels repackaged existing designs as new product lines.

There is a simple formula for luxury goods that has been proved in Korea again and again: the higher the price tag, the better they sell. There are around 1,000 people on the waiting list of a luxury label for a bag that costs W10 million. And even handbags costing hundreds of millions of won are no longer a rare sight in the streets.

Quite a few young people are so addicted to luxury goods they cannot afford that they first use several credit cars to pay for them and then end up turning to loan sharks when they are unable to pay off their credit card debts. And if they cannot afford the real deal, they opt for high-end fakes. Adding to the hype, the daughters of big conglomerate owners are busy opening luxury label boutiques rather than using their talents to develop competitive, home-grown brands.

French daily Le Figaro recently reported that Seoul is Asia's No. 2 mecca for luxury products in Asia after Tokyo. The chairman of Louis Vuitton said Korea is the fourth-largest market in the world for his company in terms of sales. The world's 15th-largest economy is the fourth-largest when it comes to luxury goods consumption? This is simply insane.

People in France, which is after all the home of many top luxury brands, value individuals who are able to create unique styles from affordable products. In other advanced countries, the only people who wrap their bodies in expensive luxury products are celebrities or the nouveau riche. In Korea, at least consumer groups should monitor the prices of luxury goods to prevent Koreans from getting fleeced, but it would be even better if people learned to live within their means.