Every year, ~US$ 10b of fashion goods transact online in S. Korea. With ~30K Korean online fashion stores exporting products overseas in 2014 and ~70K today, fashion eCommerce in S.Korea is a fast growing industry and export contributor. Korea itself exports ~US$2b of apparels annually and counts China, Japan and the US as key export destinations.
Offline, the downtown area of Dongdaemon, Seoul, is home to more than 30K fashion retailers. At 8pm every night, wholesalers in apm Place spring to life. Buyers from Shenzhen, Chong Qing, Guangzhou, Taipei, Singapore, Indonesia and many other Asian cities flood the mall which operates till 5am every day. Every outlet is nicely decked out with instore displays and the latest Korean fashion wear. Store owners closely guard their designs, prohibiting casual shoppers from taking photos.
This is the heart of the Korean fashion industry.
Hundreds of wholesale outlets operate daily from 8pm to 5am, designing their workday around the tens of thousands of retailers who fly into Seoul to source for the latest designs. Down the road, factories churn designs into products that hit the store on a daily basis – think Inditex and Zara. Goods are locally produced mainly with locally sourced materials. Most of the wholesale malls are built with residential units and short term stay apartments, allowing Real Estate owners to capture value not just from tenants but from incoming travellers.
The malls supply all the packaging materials wholesalers need for fulfilling bulk order purchases and more than 200 export agencies fill the streets to help buyers with custom logistics. To manage logistics for their thousands of retailer customers, export agencies hire middle aged couriers who track and handle packages using custom built apps. From real estate to fashion design, manufacturing and logistics, the entire value chain works flawlessly and efficiently as an integrated ecosystem.
The vibrancy of the Korean fashion industry was not by chance, but it certainly has evolved since the 1990s. With the success of their media and entertainment exports (result of yet another multi-decade industry transformation plan), the K-Pop wave has sparked great interest and demand for Korean pop culture and fashion across mainland China. The Korean government and industry players recognise this and have aggressively rode on it. Most wholesalers in Dongdaemon accept only two forms of payments – cash or Alipay. Sales assistants are hardly able to converse in English but are well adept at describing their products and discuss prices in Mandarin. Chinese buyers also stand to benefit from special export and custom taxes.