Satisfying Korea’s fascination with American brands

While American youths reveled in British styles in the 1960s, Koreans were discovering American fashion through second-hand Sears catalogues, army surplus and black markets.
This fascination with American style has continued for decades, defining mainstream fashion in Korea.
Since 1989, when the government began allowing Koreans to freely travel overseas, travelers to the United States have emulated what they saw ― the so-called “casual American look” ― and brought their favorites home. Must-have items were polo shirts, khakis, sport coats, large T-shirts, Bermuda shorts and moccasins.
Locals who’d never set foot outside Korea followed this popular imported style, which suggested a conservative, casual yet “educated”attitude. At that time, a store named England, first located near a university in northern Seoul, sold this popular look for young adults. The store branched out, its revenues snowballing every month, and eventually became Korea’s first and leading fashion conglomerate: the ubiquitous E-Land.
As Korean-Americans continued to endorse this look back home, locals fancied American brands. Importers saw the opportunities as early as the late ’80s, and the question of who would bring brands such as Ralph Lauren, Gap, Banana Republic, Donna Karan and Calvin Klein to Korea has long been a hot topic.
Talk about Tommy Hilfiger has been circulating for several years, and after less than a year of negotiations, SK Global signed the contract last November. That, of course, was before the massive accounting scandal broke that put the company on the nation’s front pages in a less than flattering light. For a time SK Global seemed bound for court receivership; creditors are now overseeing a restructuring of the firm’s business.
Kevin Cho, the general manager of SK Global Fashion Business Division Tommy Hilfiger, says the firm’s deal with Tommy Hilfiger isn’t in jeopardy. “After conducting financial restructuring, the group decided to close deals that weren’t viewed as being profitable,” Cho said. “Tommy Hilfiger was seen as potentially profitable.” (Tommy Hilfiger’s New York office did not respond to an e-mail seeking comment.)
SK Global is one of 60 companies under SK Group. With more than 30 years’ experience in manufacturing export garments, SK Group began its domestic retail business with three local brands, Caspi, Smart and Eigenpost, whose combined revenue reaches 150 billion won ($125 million) per year. With Tommy Hilfiger, Mr. Cho and Kim Man-gyun, the head of SK Global’s Fashion Business Division, say the company expects to see 50 billion won in revenue in the year 2004 alone, and a total of 46 locations in Korea by the end of next year.
They are currently overseeing the construction of 12 Tommy Hilfiger locations nationwide. The flagship store in Apgujeong opens today, and the other 11 locations, inside major department stores, are slated to open on Aug. 22.
The IHT-JoongAng Daily spoke with Mr. Kim and Mr. Cho about their new partnership with Tommy Hilfiger.
Have you been always involved with fashion?
Kim: For 12 years, I had been involved with planning and accounting in SK Group. Four years ago, when I was asked to do fashion business, I was shocked, but it took me only five minutes to change desperation to a sense of challenge.
Cho: Before I joined last year, I was involved with manufacturing leather garments for exports for eight years. Korea is still strong in leather in Asia. Leather garments for Coach and Banana Republic are all made here.

Partnership with Tommy Hilfiger has been one of the most coveted deals in Korea. How did that happen?
Kim: While handling corporate relations, I went to New York City to compare popular fashion brands there and those in Korea. And I wondered why Korean brands couldn’t become as grand, popular and fashionably appealing as Gap or Banana Republic in the States. They are perfectly wearable, mid-range-priced clothes that can work very well in Korea because Koreans have liked the casual American look since a local brand, E-Land, popularized it in the ’80s.
I realized that Korea lacked a system for fashion companies to grow big. Because I was with a strong group, I thought I could make a change and introduce so-called “fashionable lifestyle” to ordinary Koreans.
I understand that Koreans prefer American-style stores and European-style garments. Unlike Gap or Banana Republic, Tommy Hilfiger has an American operations system, which is headed by a fashion designer. So I became interested.
Like Ralph Lauren, Tommy Hilfiger is a wholesaler, which was looking for a distribution partner in Korea. I know SK Global was the last company to join the race, but because of SK Global’s involvement in national-scale retail operations and its strong background, the company was able to accomplish the deal in a relatively short period of time.

How does the operation of the Korean fashion industry affect international partnerships or deals?
Kim: Right now, we have to rely on existing Korean distribution channels and sell clothes through department stores, as Korea doesn’t have the buyer system.
I regret that the real estate situation in Korea has impeded the growth of the Korean fashion industry.
Korea has a limited amount of land, and they don’t build large shopping malls on the outskirts of the city. Even if one imports a big brand, he cannot expand like most foreign brands in terms of scale and sales, because the market is not big enough.
Because of such conditions unique to Korea, many would-be-mega-successful retailers, such as Gap, Banana Republic or Victoria’s Secret, are afraid to start their own brands here by themselves, yet they refuse to enter partnerships with local businessmen. They want to reap all the profits by themselves, but I believe they will benefit from collaboration with local partners.
Working with Tommy Hilfiger, I want to learn the dynamics and know-how of a major American fashion business operation and eventually start my own brand in Korea, which can work in the Chinese market. I see a vast opportunity in the emerging fashion market in China.

Will Tommy Hilfiger be jointly promoted with SK Group’s mobile phones?
Cho: In the beginning, Tommy Hilfiger and SK Telecom will help each other in sharing retail spaces. For instance, mobile phones can be sold in front of Tommy Hilfiger stores. But mobile phones can be more useful than that, as the phones come with content service. We’ve already begun reviewing potential promotions through SK Telecom’s mobile phone users.

What can Tommy Hilfiger fans expect from stores in Korea?
Kim: Because Tommy Hilfiger is a designer’s brand, I decided not to do any licensing; everything is an import.
Cho: We basically know what Koreans like, but tastes and trends are changing fast. To accommodate their preferences and to test the market, we are displaying 300 varieties in the product line.
Because Tommy Hilfiger is first known as a men’s collection, we will carry mostly the men’s line first. The women’s collection will be available in only two stores, the flagship store and a store inside Galleria Department Store in Apgujeong-dong, but will be added to the stores later.
In the fall, we’ll be introducing a high-end men’s line called “H,” and by the next fall, we will be launching Tommy Jeans and Girls. We need to do another big fashion show in the fall!

by Ines Cho