By Lee Hyo-sik
Many consumers here wonder why foreign makers of luxury bags, watches and other items continue to raise prices, despite the prolonged economic slump. The rule of thumb in the consumer goods industries is that when the economy is bad, manufacturers tend to keep or cut prices the same to woo buyers.
But it seems that this simple principle does not apply to Rolex, Cartier and other luxury watchmakers, which have upped prices of brand-name products here once or twice a year as an annual ritual, regardless of economic conditions.
This high-price strategy has angered a growing number of consumers who pay substantially more for the same luxury products than their counterparts in other countries.
According to retail industry sources Thursday, Swiss watchmaker Rolex will increase retail prices of its products here by about 10 percent in July. If the hike materializes, the Submariner, one of its flagship models, will likely be sold at over 10 million won ($8,600), up from the current 9.4 million won.
Omega and other watchmakers are widely expected to follow suit.
On the news of imminent price hikes, many consumers have flocked to department stores to purchase watches in advance. Luxury watches are one of must-have wedding gifts for many brides and grooms here.
In May, French jeweler and watchmaker Cartier jacked up the price of its watches by an average of 5 percent. A Ballon Bleu De Cartier watch rose to 6.9 million won from 6.7 million.
``We do not inform the public of any changes in our pricing policies in advance,’’ a Rolex Korea spokeswoman said. ``We don’t tell the media either about why we raise the prices of our goods. It is our policy not to disclose such information.’’
However, these customer-unfriendly policies have drawn criticism from a growing number of consumers who say they will not buy the high-priced items.
``I would like to own brand-name watches made by Rolex and other foreign watchmakers. But I cannot because they are way too expensive,’’ said a 38-year-old office worker in Seoul, surnamed Lee.
``As reported by many media outlets, watches, bags and other luxury items are usually sold at higher prices here than abroad. Foreign companies are taking advantage of Koreans’ love affair with luxury goods to maximize their profits,’’ he said.
Lee said he will purchase lower-priced but high-quality, stylish watches made by domestic firms. ``We all thought that watches and other goods imported from Europe would be cheaper following the Korea-EU free trade agreement. But it has turned out not to be the case.’’
In the first four months of the year, Korea imported watches from Switzerland worth 178 billion won, up 31 percent from the same period last year.
Foreign luxury firms normally say they have to raise prices, citing rising costs of raw materials and weakening Korean won against the dollar and other currencies.
But many industry watchers say Rolex, Cartier, Louis Vuitton, Gucci and other foreign luxury goods brands capitalize on Korean consumers’ craze for high-end items, raking in hundreds of millions of dollars in profit each year. They also say foreign firms rely on a high-price marketing strategy to boost their image.