[Column ] A republic of luxury goods

Yang Sung-hee
The author is a columnist of the JoongAng Ilbo.

In the 18th century, French philosopher Denis Diderot wrote an essay entitled “Regrets on Parting with My Old Dressing Gown.” After receiving a gift of a new scarlet dressing gown and throwing away his former one, he became displeased with the stuff in his study failing to live up to the elegance of the new garment. He began to replace everything, piece by piece, and entirely refurnished his study. The compulsion to upgrade material goods came to be referred to as “the Diderot Effect.”

The purchase of a new home comes with the impulse to fill it with new furniture. A luxury bag whets the desire to match it with expensive clothing and maybe a watch.

The “snob effect” describes a situation when a person has a penchant for exclusive items to flaunt their superiority in wealth and taste. In a similar term, there is the “Veblen Effect” named after Thorstein Veblen, the American economist who coined the phrase “conspicuous consumption.” All these phenomena explain why foreign luxury brands sell well in Korea regardless of their ever-rising prices.

South Koreans were the biggest spenders on luxury goods last year based on per-person spending. According to a Morgan Stanley report, total spending on personal luxury goods by South Koreans grew 24 percent year-on-year to $16.8 billion last year, or $325 per person. That’s far more than $280 and $50 spent by their American and Chinese counterparts, respectively. Morgan Stanley attributed the demand for high-end products in Korea to the rise in purchasing power and a desire to outwardly exhibit social standing. “Appearance and financial success can resonate more with consumers in South Korea than in most other countries,” the report said.

Displays of wealth are more socially acceptable in Korea than in other countries. A McKinsey survey showed that only 22 percent of Koreans were disapproving of a display of wealth, compared to 45 percent among the Japanese and 38 percent among the Chinese.

A friend who has lived abroad for a long time said she was surprised to see so many young women carrying luxury bags on subways. The fever for luxury goods among the young generation reflects their desire to be happy now and “flex” or show off what they own. Since buying a residence has become less possible for many, they spend on luxury accessories or cars. Around the world, Generation MZ devotes themselves to the here and now instead of planning for the future like their parents’ generation. Pent-up demand from the pandemic fueled their luxury shopping sprees. Some go as far as buying a second-hand luxury bag just to post a picture on social media.

Aspirations to look young and rich forces them to work part-time and put money into peer-to-peer funding to buy a luxury bag. They queue up from dawn at fashion houses and invest in a luxury product for resale. Luxury houses are raising the bar to ride on the broadened consumer base. They hike prices many times in a year and restrict purchases to those who are loyal customers. The more expensive and exclusive the luxury products, the more avid their desire to have one.

The Pew Research Center asked 19,000 random adults in 17 countries what they value in life. Material well being was first among South Koreans, whereas family and children topped the list in 14 countries. Overall in the survey, family came first for 38 percent, followed by career at 25 percent, and material well being at 19 percent.

The extraordinary materialism and exhibitionist bias for luxury goods may go beyond the usual worship for riches, as it reflects Korean society’s shadowy side of rating others based on status symbols. Ordinary citizens in their 20s and 30s who seek high-end goods could represent their individual insecurity of wishing to have a luxury bag to look better than others in society. Self-upscaling must come before upscaling their consumer products.