LVMH’s plan to win back Asian consumers? Dive into the world of K-pop

August 21, 2014
August 21, 2014

Walk down the streets of Seoul and you’ll see a woman holding a Louis Vuitton purse every three seconds. Not literally, perhaps—but South Koreans have dubbed the luxury brand’s popular handbag the “three-second-bag,” as a reference to its ubiquity there.

Now Louis Vuitton goods seem to be losing ground in Korea, however, and the brand has seen a drop in sales across Asia. Japan’s “organic” sales dropped 11% and MH370’s disappearance affected sales in Singapore and Thailand. Spending in China, home to some of LVMH’s core target consumers, also dropped in the second quarter of 2014.

But LVMH’s announcement yesterday that it will buy 61 billion Korean won ($69.7 million) worth of new shares from South Korea’s YG Entertainment could open doors to a new clientele for the company, via the “Korean Wave.” Referring to the surge of Korean pop culture throughout Asia and other parts of the world, the Korean Wave’s TV and pop music industry was valued at about about five trillion won (about $4.9 billion) in 2010. YG Entertainment—which counts among its clients the international YouTube sensation Psy—is one of the three largest entertainment companies in South Korea. (Quartz reached out to LVMH’s investment fund for the project, L Capital Asia, for comment, and we will update this post with any response.)

With its catchy tunes and good-looking girl- and boy-band members, the K-pop industry has a huge fan base all across Asia—including in Japan, Cambodia, Thailand, and Malaysia—and is building audience in South America, the Middle East, and Europe.

But it is in China where K-pop’s popularity is likely to help LVMH the most, something the conglomerate has acknowledged (link in Korean). Because of that popularity, K-pop bands often include a member from China, and entertainment companies have partnered with Chinese media outlets to promote their bands. YG Entertainment, for instance, is exclusively releasing its music via Youku, the Chinese streaming-video equivalent of YouTube.

LVMH’s investment in YG Entertainment will help YG break into the fashion industry—some of its artists, such as G-Dragon of the boy band Big Bang and CL of 2NE1, are already huge fashion icons. Meanwhile, LVMH will try its best to ride the Korean Wave—all the way to China.

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