European fashion brands rush to Korea

By Grace Kim

Korean fashion companies have successfully acquired high-profile luxury brands in Europe. With the financial crisis in Europe, these brands have been flooding the market, relatively lowering their value.

The Shinwon Group, a medium-sized fashion house, announced Sunday that it bought all the shares of Romeo Santamaria, a luxury brand in Milan, through a local corporate body S.A. Milano.

Romeo Santamaria, founded in 1947, is known for its high quality leather goods, especially handbags made from alligator and ostrich leather. Shinwon plans to add accessories and shoes to Romeo Santamaria’s products to expand into China and secure 150 sales outlets worldwide by 2017.

Korean retail conglomerate ELand Group has already bought out high-profile fashion houses in crisis-laden European countries since 2010 in order to export brand-named goods to China and meet the country’s bourgeoning demand for luxury consumer demands. ELand’s recent acquisitions include designer shoe maker Lario, Belfe, Mandarina Duck and Cochinelle which produces women’s underwear and accessories. All four brands are from Italy.

“It’s better to buy out luxury brands than to sign a contract for the rights when high-profile fashion companies are flooding the M&A market,” said an insider source.

The high brand awareness of European designer goods makes up for the low recognition of Korean labels in the Chinese market. In effect, ELand acquired Mandarina Duck, even though another company owned the rights, to expand into China.

Additionally, Korean firms can absorb the skills of European artisans and grow into global corporations through the acquisitions of high-profile brands, he said.