Survey: South Korea is a luxury friendly hot spot

South Korea is emerging as one of the most "luxury friendly" places in the world, as the country's growing wealth mixes with a rising tide of shopping-minded tourists, a survey by McKinsey & Co. shows.

The survey, which focused on people who have purchased luxury goods, found that such products appeal more to South Koreans shoppers than in other countries.

Few South Koreans feel guilty about spending money on luxury-brand items or think that they are wasting money on them, the survey found. Only 22% of South Korean respondents said they think that showing off luxury goods is in bad taste considerably lower than Japanese and Chinese respondents.

In part, that's due to South Korea's homogenous culture, which both encourages people to distinguish themselves with high-end products and pressures them to keep up with those who do.

Additionally, a deep tradition of craft-oriented trades in the country has created a "respect for very fine products," says Aimee Kim, a McKinsey partner in Seoul who specializes in consumer markets. "Some purchasers may have initially purchased a luxury item to conform, but after the first purchase, they notice a difference in quality."

She said the results of the survey show there's still room to grow in South Korea for luxury brands, which have raced to the country in recent years. Several Korean conglomerates and investor groups acquired luxury brands from European owners over the past decade as well.

Amid the global economic slump, only shoppers in South Korea and China in the McKinsey survey expressed in sizable numbers that they spent more this past year on luxury goods than before. Some 46% of South Koreans in the survey said they spent more in the past 12 months on luxury items than before, while 44% of Chinese said so. Those figures were sharply higher than the single-digit rates for Japan, the U.S. and Europe.

South Korea accounts for about 4% of global spending on luxury goods. Its rise has been slowed somewhat by the concentration of distribution through department stores and duty-free shops.

But last year, for the first time, big luxury brands could operate stand-alone stores at new malls in Seoul and Busan. Several other new shopping centers are planned for Seoul and Incheon that would house stand-alone stores for big brands.

Also, luxury retailers in South Korea drew tourist shoppers from Japan and China in huge numbers during the past year, when the Korean won was sharply lower against other major currencies.