Luxury fashion houses come under criticisms
South Korean affiliates of the world’s three foremost luxury brands _ Hermes, Channel, and Louis Vuitton _ are found to hardly donate despite their handsome bottom lines.
The three outfits’ Korean subsidiaries revealed their 2020 income statements this month for the first time in decades because of the revised rules.
Channel Korea’s 2020 operating profit stood at $134 million, up 34.4 percent from a year before. Its 2020 donation stayed almost flat at $600,000.
Hermes Korea chalked up $120 million in operating income in 2020, up 15.9 percent from a year ago. And it donated some $270,000.
The two are much better compared to Louis Vuitton Korea, which saw its operating profit almost triple to $136 million last year. But it did not donate at all.
Things are almost the same for other luxury fashion houses, including Christian Dior Korea and Burberry Korea, whose profits were tens of millions of dollars in 2020.
The former’s 2020 donation was less than $10,000, while that of the latter was below $5,000.
“As they could not travel abroad due to the pandemic, wealthy Koreans went on a spending spree at high-end luxury shops last year. This boosted the profitability of luxury fashion houses,” Prof. Sung Tae-yoon from Yonsei University said.
“Overseas travels are not likely to resume this year. That means that the top-tier fashion houses’ profitability will be good in 2021, too”.
Critics said that the luxury brands are required to think about ESG activities over the long term because otherwise, they may lose customers.
Short for environmental, social, and corporate governance, ESG refers to the three central factors in measuring the sustainability of a company or business.
ESG has emerged as a significant managerial value across the world over the past few years.
“Thanks to their good brand images, luxury fashion brands have so many customers in Korea. Accordingly, it seems that they don’t bother to conduct social responsibility activities here,” Prof. Kim Woo-chan at Korea University said.