Dior-porable: Designer brands face backlash in Korea over production scandals

Advertisement for a Dior-brand bag [DIOR] Some Korean consumers, among the world's biggest buyers of personal luxury goods, have become disenchanted by the glamour of fashion houses following reports that subcontractors of Christian Dior's Italian unit supplied a 2,600 euro ($2,786) Dior-branded handbag at a meager 53 euros. Shoppers once interested in Dior are opting out of the brand while others are trying to get refunds for items purchased less than seven days ago. Korean media outlets were quick to pick up reports based on a ruling by a Milan court against an Italian subsidiary of LVMH with headlines declaring that a 3.85 million won ($2,775) Dior bag originally cost 80,000 won. The ruling detailed how Chinese-owned subcontractors hired by the subsidiary violated worker protection laws by making workers sleep in the factory to facilitate 24-hour production and removing safety machines. On Chicment, an online luxury goods forum with over 690,000 members, buyers have been expressing shock over the recent revelations and have been hinting at a wider boycott. One of the forum members said in a posting that they considered buying the brand's Lady Dior bag, but the news served as "a deal breaker," a decision that resonated with other commenters. Another user expressed concern over the mistreatment of workers. “It’s not the price that is the problem. I can’t believe I’ve been buying items that were made in through an unethical process that exploited workers,” a user posted. A different user listed the fashion brands under LVMH and discouraged members from buying their products over their “labor exploitation scandals” and business model that “prioritizes profit-making over craftsmanship.” The practice was commonplace in luxury goods manufacturing to cut production costs, the report said — and for the contractors charged in the report specifically, allowed them to charge as little as 53 euros for a bag retailing at 2,600 euros. Representatives for LVMH did not reply with a comment. Korea is one of the largest luxury goods markets in the world. Spending per capita in the country was the highest in the world as of 2022, and was the seventh-largest global market with a value of $14.65 billion. The “big four” brands — Hermes, Louis Vuitton, Chanel and Dior — recorded over 5 trillion won in sales last year, despite raising their prices. Local consumption of personal designer goods tapered in Korea last year due to a nationwide economic slowdown and a strong currency that prompted Koreans to buy brand items overseas, according to U.S. consulting firm Bain & Company in its 2024 worldwide luxury goods market study. With the recent revelations, the Korean luxury goods market is expected to take a further hit as consumers increasingly place importance on sustainable practices. “No one wants to buy a so-called luxury bag stamped out in a factory by abused workers,” said Lee Jae-ik, an office worker who frequents high-end shops on his travels and in Korea. “When I buy a luxury good, I’m buying the story attached to it. I’m buying the bag that Grace Kelly, Jane Birkin and Princess Diana carried, and is advertised [by LVMH] as made in ateliers by professional craftsmen. I’ve always known about the raw material prices. It’s unfortunate, but nothing new.” Around 77 percent of all shoppers said they would be interested in buying designer goods that were produced sustainably, according to a European report in 2023. Of that 77 percent, over half of consumers aid they would be willing to pay up to 10 percent more if the item was made or delivered in line with sustainable practices. Korea’s luxury goods consumer base is also becoming younger, a demographic that is more prone to be sensitivity to sustainability issues. Around 44 percent of all luxury goods purchases in Korea were made by customers under the age of 40, according to a survey conducted by Lotte members last year. This is a larger portion than those in their 40s and 50s, who made up 42 percent of all purchases. People in their 30s made up 22 percent of all purchases, while those in their 20s made up 21 percent. And in Korea, where luxury goods are particularly associated with self-worth and exclusivity, it might have an even bigger impact, prompting retailers to rethink their strategies in promoting the merchandise. “Korean stores put more effort into making branded goods seem more exclusive,” said the avid shopper Lee, who bought luxury products on his trip to Paris this year. “It depends on the store, but a lot of places in Korea make you wear gloves before touching leather goods, and they don’t allow you to take photos, either. It adds on to the illusion of making it a more luxurious experience. The digital system they make you use to sign up to enter the shop is peculiar, too,” Lee added. Chanel Korea was fined 3.6 million won by the Personal Information Protection Commission in November of last year for collecting personal information including birth dates, home addresses and contact numbers from customers who were in line to get inside a store. With the discourse on handbags spreading, other luxury goods such as perfume and jewelry that bank on images of glamour and artistry may be affected too. “Like the Dior case, are jewelry prices incredibly inflated too?” a user said on Chicment. “I realize that we’re all paying for the brand image for luxury goods, but still, they should at least be better in quality or design than regular products.” BY KIM JU-YEON [[email protected]]