Watchmaker TAG Heuer launches direct operations in S.Korea

Swiss watchmaker TAG Heuer S.A. is set to launch direct operations in South Korea, the world’s seventh-largest luxury market in terms of sales last year.  

TAG Heuer’s Korean unit and its domestic market distributor Myungbo Inc. have signed an operations transfer agreement, according to sources familiar with the matter on Tuesday.

The watchmaker will complete the takeover of operations in Korea by the first half of next year and will start direct operations of all TAG Heuer stores in the market in the second half.

The unit under French luxury goods group LVMH Moët Hennessy Louis Vuitton has boosted brand awareness in Korea with its Aquaracer divers' watch lineup, Carrera sports watch collection and its global ambassador Son Heung-min, the Korean footballer who plays for Premier League club Tottenham Hotspur.

LVMH is increasing direct operations in Korea, where the craze for luxury handbags, clothes and jewelry has heated up since the onset of COVID-19. The luxury market in Korea grew 24% on-year to $16.8 billion in 2022, compared with a 10% decline in China’s high-end goods market the same year.

Hublot SA, LVMH’s other watchmaker, will also launch direct operations at some upscale shopping malls in Korea such as Shinsegae Department Store in Gangnam and Hyundai Department Pangyo Store from January 2024.   

LVMH set up Spanish designer bag company Loewe SA’s Korean subsidiary in June 2022 after terminating its distribution contract with fashion retailer Kolon FnC.

The luxury fashion group’s leather goods brand Celine ended its sales contract with Korea’s Shinsegae International at end-2022 and started direct operations this year.

German luggage manufacturer Rimowa GmbH, which LVMH acquired in 2017, has been run by local subsidiary Rimowa Korea since 2019.

“Direct operation require fixed costs like labor and rent, but can increase sales margins as it saves fees for local distributors. While the global luxury market is expected to slow amid the economic downturn, LVMH is focusing on Korea, which performs better than other markets,” said an industry insider.

Write to Kyeong-je Han at hankyung@hankyung.com

Jihyun Kim edited this article.