"If you can't afford a house, you buy a bag" and "eat like a poor person and dress like a rich person" are the current situation of most Koreans.
As a major consumer of luxury goods, how much do Koreans love to buy luxury goods?
According to the Morgan Stanley report, South Korea is the country with the highest per capita personal luxury expenditure in the world in 2022, with an average of $325 per person, far surpassing the United States' per capita $280 and Chinese average $55, and won a world first.
Young Koreans who have fun in time
In South Korea, the main people who buy luxury goods are not the rich with successful careers, but the young people in their twenties and thirties. Modern department store data shows that the growth rate of luxury sales in South Korea's 20-overs increased from 27.5% in 2018 to 37.7% in 2021, and the growth rate of luxury goods sales in the 30-overs also increased from 16.3% to 28.1%.
Why are young Koreans so obsessed with luxury?
This stems from their recognition that luxury is a symbol of social status. Louis Vuitton bags, Gucci shoes, Prada clothes, Tiffany jewelry, Cartier watches... These name tags constitute a complete social identity system, and Koreans redefine their identity and redivide social classes through wear.
In Korean society, the display of wealth by individuals is more socially acceptable. A survey by McKinsey, a global consultancy, found that only 22 percent of South Korean respondents believe that showing off luxury is tasteless, compared with 45 percent in Japan and 38 percent in China.
A relevant person from a luxury company in South Korea said that now not only young people in their 20s, but even teenage students want to own brand-name luxury goods. On social networks, posts about "Experience with designer packs" can be found everywhere.
I can't afford a house, so I can only buy a bag
In addition to "love face", high housing prices are the main reason why young people buy luxury goods.
In recent years, South Korean housing prices have continued to break new highs. In order to suppress housing prices, the upper limit of housing loan interest rates of Korean commercial banks broke through 8%, reaching a record high. Therefore, for the matter of buying a house, young Koreans have long been desperate. Many young people realize that even if they work hard, they cannot afford high housing prices and cannot cross the disparity.
The "relative sense of deprivation" brought about by rising house prices has prompted people to turn their attention to luxury. Correspondingly, those relatively older people who profit by buying and selling houses have become the backbone of the luxury market, and now, young people who give up buying houses and only spend nothing have become another rising force.
Overall, Koreans consume luxury goods not only for short-term enjoyment, but also as a "cost-effective" investment. Through second-hand transactions, some luxury goods not only will not reduce the price, but will also increase in value, which is equivalent to enjoying luxury goods for nothing, and finally making money, relative to stocks, real estate and other investments, luxury goods for young people who cannot afford to buy a house is a "cost-effective" choice.
"Indebted" Koreans
According to reports, as of the end of December 2022, the average debt per household in South Korea was 86.5 million won (about 450,000 yuan). The debt situation of young South Koreans is even worse, according to the survey, the average head of household under the age of 39 in South Korea has more than 100 million won (nearly 520,000 yuan).
For many years, South Korea had the highest total household debt as a percentage of GDP in Asia. In the first quarter of 2022, South Korea's household debt as a percentage of GDP was already as high as 104.3%.
Generally speaking, the threshold for household debt as a share of GDP is 85%, and exceeding this level means that there is a greater risk of a debt crisis. However, South Korea still has a continuous supply of credit cards and allowed the debt to skyrocket, which has led many people to choose to borrow to maintain loans, and the debt level is getting higher and higher, falling into a vicious circle.
There are probably few countries in the world that are as crazy about luxury as South Korea.
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Editorial | Leyla