Chris Brockie
Aug 17, 2015

Local brand support remains deep-rooted in Korea

When South Koreans shop, a subconscious understanding of what it means to be Korean, including expectations to put country ahead of all else, comes into effect—even while shopping online through overseas retailers.

Local brand support remains deep-rooted in Korea

When South Koreans shop, a subconscious understanding of what it means to be Korean, including expectations to put country ahead of all else, comes into effecteven while shopping online through overseas retailers.

The tendency is so strong, Western brands typically struggle to gain traction among the country’s discerning, well-educated and tech-savvy consumers, who are clearly willing to spend. The 1996 departures of French and US multinationals Carrefour and Walmart typify the failure of overseas brands in South Korea. Support for domestic brands is strong. It is as much recognition of political history and the urge to build a nation, as it is a part of the chaebols’ understanding of their local market and consumers.

So, when someone tweets that they are at “…Hyundai Department Store Shinchon with mom. Bought CHANEL lipstick and KIEHL’S whitening cream…” And then days later posts to Instagram “On the way home after church service. Got cosmetic sample from Lotte Department Store main branch…” what, if anything can be learned about brand loyalty?

  • Is this consumer a loyal Chanel buyer?
  • Which is her preferred department store, Hyundai or Lotte?
  • Does ‘mom’ influence her purchasing?
  • Is ‘mom’ a brand follower?

With Koreans among the least likely to share social-media content, Meltwater looked into what drives them to support homegrown brands over ‘foreign’ counterparts and found that while consumers may use social media to say what they are doing, much of the ‘why’ concerning brand support is missing. For that you need to look at history.

The history

Rising from war-torn rubble into a global economic powerhouse, South Korea has fermented a cultural shift emphasizing materialism, immediacy and pleasure. And since opening itself to international markets in 1997 (complying with International Monetary Fund (IMF) demands), South Koreans have become global consumers; acquiring tastes similar to developed Western countries.

A 2008 Journal of Fashion Marketing and Management study focusing on university students in Seoul, found one significant factor driving Koreans’ purchasing of foreign luxury brands was consumer ethnocentrism. Aside from the desire to conform or seek social recognition, it was considered a ‘personal value’. And, despite younger consumers being more globally minded, concerned more about price and quality than country-of-origin, consumer ethnocentrism still plays an enduring role.

This and other studies found consumer ethnocentrism significantly influenced attitudes toward imported goods and that, among Korean consumers, negatively influenced purchasing decisions, discouraging intentions to buy. But the researchers also found “the influence of materialism, conformity, and the need for uniqueness on young Korean consumers’ purchasing intentions” was positive.

The report claims, “the negative impact of consumer ethnocentrism suggests foreign luxury marketers should be aware of the potential that anti-import sentiments can be triggered among Korean consumers whenever a proper cause is given and once it does, it can be severely damaging for foreign luxury brands.”

In a country dubbed The Republic of Samsung, where anyone can get through the day using only Samsung products, do plain conventionalisms explain Korean-branded dominance? Some suggest protectionism, rather than feelings of national identity, has pushed Korean consumers toward domestic products.

Inculcated local support

Invaded multiple times, including Japan’s 35-year annexation, the Korean Peninsula and its people have long been beleaguered. South Koreans’ notion of national pride has a dominant effect in building their sense of ‘self’ and their collective sense of global belonging.

When a young Korean tweets “shopping at a Hyundai Department Store” or “stopping in at Lotte on way home”, she is confirming the store brands as extensions of her being Korean. Raised in a system where schoolchildren learn local-brand purchases are patriotic and criticizing a name like Samsung is akin to insulting the government, she is inculcated to be nationalistic.

This system of instilling stems from a history tied invariably to the rise and sustained power of the chaebols, and a personal sense of allegiance to them, which, by default, means supporting one’s country.

For 18 years, beginning in 1961, the government, under staunch Nationalist General Park Chung-hee, dictated economic development. Under his protection, the chaebols soon dominated every aspect of Korean society, leading to a culture where, unhindered by competition, Korea’s retailers enjoyed manufacturer agreements that allowed them to charge a premium for foreign as well as domestic products.

For many Koreans this created a love-hate relationship with the chaebols. They decry in-country expansion at the expense of smaller enterprises, yet are proud of chaebols’ global achievements. They also recognize the dangers these companies pose should they fail.

The top 10 chaebols represent nearly 80 per cent of national GDP. Samsung Group alone represents between 20 and 28 per cent. As bloomberg's William Pesek suggests, “The sheer scale of the Samsung chaebol leaves virtually no room for a South Korean Google or Uber to disrupt the economy.”

Nonetheless, these are their brands and South Koreans support them.

Buying local off-shore

Korean consumers, good at searching for value, are starting to buy inexpensive Chinese smartphones in a market dominated by Samsung Electronics (63.4 per cent). This search for value also has Koreans shopping heavily offshore. But even here they still express loyalty to domestic names. Moving away from domestic stores run by Shinsegae and Lotte, they are importing Samsung and LG televisions, and other South Korean-branded goods.

This changeround is built on consumer’s understanding of how much more they pay for domestic-branded goods than overseas consumers do. It also shuns the old Park regime’s protectionism while still giving credence to an instilled need to support local brands.

Trails within posts

As noted, Koreans are unlikely to share content online. With an estimated 11 million active social networkers in 2011, only one-third of users actively shared content. When they do share, they largely focus on entertainment, politics and celebrities; not on why they support a particular brand.

However, Meltwater found follow-through links in postings, and the trail opens another world, giving insight into brand support and the platforms Korean consumers use.

One particular tweet, for example, led to an Instagram post that led to the user’s YouTube channel, where she shares beauty and fashion tips with more than 19,000 followers.

Similarly, following our young woman who tweeted about buying Chanel at a Hyundai Department Store leads to Pinterest posts with an overwhelming number of her photos taken outside and inside her local Lotte store, suggesting Lotte is her preferred store.

Her posts also reveal that she spends considerable time shopping with her mother, drinking iced americano coffee and buying Ralph Lauren clothes.

When she tweets about buying Chanel at Hyundai Department Store, it confirms her choice of ‘foreign’ luxury but not her preferred store. When she says, “shopping with mom” it is likely ‘mom’ influences purchasing decisions.

Despite a generational divide over the General Park regime, both mom and daughter understand the ingrained need to support Korean products. This inculcation will almost certainly see both choose Samsung or LG smartphones, televisions, washers or air conditioners. Their rice cooker will also likely be Korean, probably Cuckoo.

That Koreans are prepared to shop internationally via online portals but still buy Korean-branded products indicates the historic and deep-rooted support they have for their products. What is perhaps fundamental, however, is that brands must engage Koreans on their level, in their own language, using their preferred communication platforms if they are to break that historical, deep-rooted local support.

Christopher M. Brockie is a freelance journalist. This piece was commissioned by Meltwater.


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