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Latex Mattress in South Korea

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					           PRODUCT MARKET STUDY: LATEX MATTRESS

                         Date: January 2004




1.   MARKET         :     SOUTH KOREA


2.   DEFINITION OF PRODUCTS:


     HS CODE                   ITEM DESCRIPTION
                               Mattress of other materials (than
                               cellular  rubber   or   plastics):
                               hereafter “latex mattress.
     9404.29.0000
                               According to the Korean HS code is not
                               further classified but comprised of all
                               “other materials” including coir mattress.


2.   PURPOSE OF THE PMS


     The purpose of this report is to promote Malaysian latex mattress for

     Korean market by evaluating Korean market and to provide relevant

     information to Malaysian suppliers of latex mattress for penetrating

     Korean market.




3.   SOUTH KOREA’S IMPORTS


     3.1    In 2002, South Korea’s global imports of latex mattress totaled

            US$11.43million (RM 43.43 million), an increase of 104.8

            percent as compared to the previous year.



                                                                            1
      3.2    Overall, among top 10 foreign suppliers of South Korea’s imports
             of latex mattress posted positive growth, excluding Australia
             (-17.1% growth from 2001).


      3.3    As for major import sources, China ranked the top with the

             amount of US$3.93 million (RM 14.93 million) or a 385.7 percent

             increase from 2001 followed by Italy (US$2.10 million or RM7.98

             million, up 34.4%) and Belgium (US$1.24 million or RM4.71

             million, up 8.1%). Imports from these three countries accounted

             for 63.60 percent of South Korea’s total imports.


      3.4    France ranked fourth with the amount of US$0.95 million

             (RM3.61 million), occupying 8.31 percent market share followed

             by Germany (US$0.87 million or RM3.31 million) which

             accounted for 7.59 percent market share.


      3.5    Meanwhile, South Korea’s imports from Malaysia totaled

             US$0.41 million (RM1.56 million), an increase of 11.8 percent

             from a year earlier. Malaysia was positioned as the seventh

             largest supplier, taking 3.60 percent share over the total

             market which registered a decrease of 45.37 percent from

             2001.


             Details of South Korea’s major import source of latex mattress

             are as shown in Table 1.



Table 1: South Korea’s Major Import Source of Latex Mattress


                                                                             2
                                                                     (Unit: US$1000, %)
 COUNTRY              2000                        2001                 2002
                             *Change                     Change               Change
                 Amount      **Market       Amount       Market    Amount     Market
       Total:                share                       share                share
                             61.5                        75.4                 104.8
                 3,182                      5,581                  11,431
                             100.0                       100.0                100.0
                             193.6                       60.4                 385.7
 CHINA             505                      810                      3,934
                             15.87                       14.51                34.42
                             47.1                        111.3                34.4
 ITALY             739                      1,562                    2,099
                             23.22                       27.99                18.36
                             147.3                       86.5                 8.1
 BELGIUM           614                      1,145                    1,237
                             19.30                       20.52                10.82
                             -4.9                        38.3                 1,497.1
 FRANCE              43                      59                        950
                             1.35                        1.06                 8.31
                             -29.1                       92.3                 190.8
 GERMANY           155                      299                        868
                             4.87                        5.36                 7.59
                             -0.1                        -15.4                60.1
 USA               318                      269                        431
                             9.99                        4.82                 3.77
                             70.7                        47.0                 11.8
 MALAYSIA          251                      368                       412
                             7.89                        6.59                 3.60
                              -                          82.7                 711.4
 VIETNAM             27                      50                        407
                             0.85                        0.90                 3.56
                             -49.2                       1,557.9              -17.1
 AUSTRALIA           25                     412                        342
                             0.79                        7.38                 2.99
                              -                          279.3                172.0
 SWISS               22                      83                        226
                             0.69                        1.49                 1.98
* indicates percent change from the previous year.
** market share over ROK’s total imports.
Source: Korea Trade Information Service (KOTIS)




4.       SOUTH KOREA’S EXPORTS



                                                                                          3
4.1   In 2002, South Korea’s exports of latex mattress reached US$3.64

      million (RM 13.83 million) or an increase of 75.4 percent as compared to

      the previous year.


4.2   As for major export market, USA topped the list as South Korea’s main

      export market with exports amounting to US$0.76 million (RM2.89

      million), a decrease of 14 percent from 2001, followed by Japan

      (US$0.69 million or RM2.62 million) and Uzbekistan (US$0.51 million or

      RM1.94 million). Exports to these three countries accounted for 53.7

      percent share over South Korea’s total exports of latex mattress.


      Details of South Korea’s Major Export Market of latex mattress are as
      shown in Table 2.




Table 2: South Korea’s Major Export Market of Latex Mattress



                                                                            4
                                                             (Unit: US$1000, %)
COUNTRY                 2000                  2001                 2002
                Amount Change        Amount          Change Amount        Change
      Total:               54.0                      -5.5                 75.4
                2,195                2,074                   3,638
                           100.0                     100.0                100.0
                           54.4                      -27.1                -14.0
USA             1,206                878                     755
                           54.94                     42.33                20.75
                           100.0                     0.0                  -2.3
JAPAN           705                  705                     690
                           32.12                     33.99                18.97
                                                                           -
UZBEKISTAN      -              -          -           -      507
                                                                          13.94
                                                      -                   9,125.9
TADZHIKISTAN    -              -          4                  353
                                                     0.19                 9.70
                                                      -                   88.9
SINGAPORE       -              -     177                     334
                                                     8.53                 9.18
                           1,301.2                   44.4                 21.1
CHINA           119                  171                     208
                           5.42                      8.24                 5.72
                                                                           -
KYRGYZSTAN      -              -      -               -      144
                                                                          3.96
                           624.6                     90.0                 1,076.8
AUSTRALIA           5                 10                     119
                           0.23                      0.48                 3.27
                                                                           -
MALAYSIA        -              -      -               -      107
                                                                          2.94
                                                                          31,107.4
RUSSIA          -              -      0              -72.4    93
                                                                          2.56
Source: KOTIS




5.      SIZE AND GROWTH OF THE MARKET




                                                                                     5
      5.1    Supply and demand of mattress connected with the fashion            in

             purchasing bed in the local market. According to the industry

             source, supply rate of bed already exceeded 65 percent in Korea.



      5.2    As for housing type, apartment took 70 percent over the whole

             housing category in Korea. Thus, the western style residence

             calls for more demand of bed rather than sleeping on “Ondol”

             (Korean traditional way of floor heater).



      5.3    Many more consumers gave priority to bed for future purchasing

             furniture in the survey conducted by the Furniture Journal (one

             of the leading local furniture magazines) last year.



      5.4    The study indicated that Korean consumers’ priority for

             choice of furniture types to be purchased in the future was bed

             (37.8 percent response rate), followed by 34.9 percent for living

             room furniture (mostly sofa sets), 17.5 percent for children

             furniture and 9.8 percent for kitchen furniture (mostly dining sets).




      5.5    In the mean time, Korean consumers put more attention to

                     acquiring better quality bed for sound sleep since this

preference           is very natural.   In view of this, furniture industry expects


                                                                                 6
that         local consumers would spend more money for purchasing good

             quality bed (actually, mattress) than any other furniture items

             as the living standard improves.


       5.6   Therefore, industry forecasted bed (and mattress) as the most

             promising furniture product with the biggest growth potential for

             Korean market.



       5.7   As to mattress, latex mattress is a new trend, occupying

             around 35 percent of the whole mattress market in Korea.

             So far, spring mattress produced by top three local makers (Ace

             Bed, Daejin Bed, and Simons) took the market as the majority

             type of mattress.



       5.8   According to the industry source, consumption of latex mattress

             will likely to record around 10 percent grow for the coming years

             mainly encouraged by the consumers’ concern about better

             condition of mattress for sound sleep.




6.     DOMESTIC PRODUCTION



       6.1   According to the industry sources, locally produced bed

             occupied almost 80 percent over the total bedroom furniture


                                                                               7
               market in Korea.


       6.2     There are around 42 local manufacturers of wooden bed

               including three top makers such as Ace Bed, Daejin Bed, and

               Simons, accounting for more than 60 percent share in Korea.

               All most of them are producers of bed and mattress at the same

               time.



       6.3     As to the illustrated three major manufacturers, they produce

               quality bed and mattress of spring for both local and global

               market.   Meanwhile, medium size companies are importing bed

               and mattress (of latex, coconut fiber+latex) on top of their own

               items to meet the taste of consumers.




       6.4     For consumer’s awareness and confidence, local brand

               generally carry details of manufacturers’ warranty and certificate

               (if acquired).




       6.5     Type of mattress available in Korea:



   Type                           Customer Trend

One mattress     – the most preferable type for general consumers




                                                                               8
                         – hotel
Two mattresses            (However, the demand of general public is on the rise.)


Bunk bed                 - children, dormitory, training institute


Adjustable bed
                         - patients and senior citizens, seeking personalized comfort

Canopy and
                         - not gaining popularity to general consumers but attractive
pencil post
                         to some female customers
canopy bed
Platform bed
                         - fit for urban apartments where space and effort are a
                         premium




          6.6      Size of mattress:

                   Length on average: 1950mm ~ 2000mm
                  Type                  Width on average
      1         Single              1000mm
      2         Double              1350mm
      3         Queen               1500mm
      4         King                1700mm ~ 1800mm
      5         Super single        1100mm
      Additional sizes are available upon the consumer requirement.




7.        CONSUMER CHARACTERISTICS


          7.1      Local consumers are very much concerned about durability

                   as well as comforts when it comes to selecting mattress.

                   Thanks to the characteristics of latex, consumers find

                   advantages of longer guarantee period (more than 10


                                                                                        9
years),             noise free, hygienic merit compared to spring bed

mattress.



      7.2    General consumers regard the contents of latex decide the

             quality of latex mattress. Therefore, they want to purchase

             100% content of latex trapped by the commercial

             advertisement. Overall, latex mattresses on the sales

                    contained 20 percent latex, carrying the label

“100% pure          latex mattress” on the surface.



      7.3    However, consumers are not fully aware of the ambiguous

             description - “100% pure latex” which misleads consumers

             to believe the composition of latex is 100%. Normally, the

             description of “100% pure latex” indicates the mattress is

             used of pure latex (not synthetic rubber) regardless of

                    composition over the total substance.




      7.4    Currently, there are around 10 international brands for latex

             mattress in Korea. Local consumers understand that raw

             material (latex in milk) is produced by Southeast Asian

             countries; however, their preferred brands are mostly from

             Europe.




                                                                        10
    7.5   Dunlopillo (UK) has emerged as the foremost runner

          of latex mattress for Korean market introduced by a local

          agency; since 1986 the luxurious brand has won the reputation

          among the high class consumers in Korea.



    7.6   Generally, Korean consumers are much concerned about

          mattress which brings sleep quality and health when they

          purchase bed. Therefore, there are particular demands for

          hygiene-centered and technically advanced mattress;

          adjusts for personalized comfort (by eliminating feeling of

          partner’s movements), using stain resistant fabric, hypo-

          allergenic, dust mite free and so on.



          Detail of South Korea’s consumer preference in mattress is
          as shown in Table 3.




     Table 3: Consumer Preference in Mattress



                Consumer preference
                - Durability (lasting more than 10 years)
Quality         - Comforts
                - Hygienic




                                                                        11
                        Traditionally, European latex mattresses are considered as
     Country Origin
                        superior products in terms of technology, regardless of
                        content of pure latex for the finished goods.

     Type               - Hard type of latex mattress is more popular.
                        - “Talalay” and “Dunlop” processing are considered as
                        proper technology method for latex foam.

                        “Queen-size” (around 1500mm x 2000mm) is the most
     Size
                        popular requirement for all ages.

                        - Bio friendly mattress cover is necessary accessory for
     Fabric (for
                        sales of mattress.
     mattress cover)
                        - Velvet touch fabric is preferred by women.
                        Viscoelastic memory foam is selling as the substitute for
     Other
                        latex mattress.




8.          PRICES


            8.1   Pricing and claimed discounts are varied widely according to the

                  contents of pure latex (20% ~ 80%) or the import source of the

                  latex mattress. It is common in both off-line and on-line shops.




                                                                                     12
         8.2     Among the observed category, there were some styrene

                 butadiene rubber mattresses selling at below W200, 000

                 as chap priced latex mattresses from Southeast Asia. It is

                 attributed to fierce competition among the distributors to absorb

                consumers who more focused on cheaper price of latex mattress.



         8.3     Consumer’s conception for reasonable price for latex

                 mattress in “Queen Size” would be ranging from W650, 000

                 to W800, 000 advised by furniture professionals through

                 advertisement or local furniture magazines.



         Details of Price range and major distribution channel for latex mattress
         as shown in Table 4.




                 Table 4: Price Range and Major Distribution Channel

           Price range (Won)     Origin (Brand)                   Distribution channel
                                 Finished products from
           *195,000                                               Internet shopping malls, TV
Low                              Vietnam, China, and
           280,000 ~ 550,000                                      home shopping channel,
priced                           Malaysia.
                                                                  furniture complex in the outskirts
                                 Products processed (for fixing
                                                                  of cities.
                                 mattress cover) by local




                                                                                         13
                                   makers based on European
                                   latex cores.
                                   Malaysia (Getah),
                                   Italy (Pirelli),
                                                              Shops of general furniture
Medium                             Germany (Cobeco),
           600,000 ~ 1,200,000                                makers (agents), furniture towns
priced                             Netherlands (Morris),
                                                              established in vicinity of Seoul,
                                   Belgium (Latexco),
                                                              department stores
                                   Swiss (Roviva: synthetic
                                   latex)
                                   Finished products from     Luxurious furniture stores and
                                   UK (Dunlopillo),           specialty shops for bedding in
                                   Swiss (Roviva),            the Furniture street in southern
Premium
           1,300,000 ~ 3,100,000   Belgium (Latexco).         Seoul (Chungdam-dong, Shinsa-
priced
                                                              dong, Apgujeong-dong) and
                                                              major department stores.




9.        IMPORT REGIME & POLICY

          No specific regulation or restriction on importation of bed and bedroom
          furniture.




10.       LABELLING REQUIREMENTS

-         Country of Origin is the only requirement for imported latex
          mattress.


      Ex.) “Made in Malaysia”
      Marking a country origin by putting a sticker on the surface or
      by embossed carving on the product.




                                                                                    14
-      Certificate of imported latex mattress is not compulsory labeling
       requirement; however, it will be attracting more consumers to choose
       the products. Therefore, it is much recommendable to attach related
       certificates if acquired from any reliable international laboratories to
       promote Malaysian latex mattress in Korea.




11.    DOCUMENTATION REQUIREMENTS

       No other specific requirement than general documentation for
       importation:


       a)     L/C
       b)     B/L
       c)     Commercial Invoice
       d)     Packing List (Name of Item, No. of Item, Volume of Item)




12.    CUSTOMS TARIFF
       8 percent (basic)




13.    PACKING
       According to the customer requirement:



      Ex.) P.E. (polyethylene) is mainly used for packaging
      material. In order to maintain quality, the mattress should
      not be folded or bent during shipment and storage.



14.    DISTRIBUTION CHANNELS


                                                                                  15
      -       Importer => Retailer => Consumer

      -       Manufacturer => Retailer (Agent) => Consumer

      -       Importer (Retailer) => Consumer



15.   TRANSPORTATION


From the nearest port in Korea -- ( trucking) ----- Door to Door Service


      15.1    Importers or distributors normally employ third party for

              consummating delivery. They just assist in tracking the

              consumers order/purchasing.


      15.2    If the consumer’s home is out of Seoul and vicinity they incur a

              remote delivery surcharge.


      15.3    For areas other than the remote and outside of geographical

              area    (like Jeju Island, Ulung Isand) normally served by

              distributor carriers free of charge.


16.   SHORT AND LONG TERM OPPORTUNITIES FOR MALAYSIAN
      EXPORTERS


      16.1    In 2002, South Korea’s imports from Malaysia amounted to

              US$0.41 million (RM 1.56 million), up 11.8 percent from 2001.

              Malaysia was identified as the seventh largest supplier, taking

              3.60 percent share over the total market which registered an

              increase in terms of export value. However, market share-wise,



                                                                                 16
       Malaysia saw a 45.37 percent decrease as compared to 2001.



16.2   As to primary factors for Korean consumers to select

       mattress, restfulness and comforts together with durability

       are given priority over price. Therefore, Malaysian exporters

       of latex mattress can obtain more market share if they

       mainly target medium-high quality latex mattress.



16.3   Korean consumers have the biased preconception and

       unilateral preconception on the products according to the

       supplying regions. Thus, Malaysian suppliers require

       enhancing their efforts to approach Korean market and

       enable them to face Malaysian quality items by aggressively

       participating   in   relevant    international    fairs    (such   as

       KOFURN, Imported Goods Fair) in Korea.



16.4   Also, eco-friendly mattress such as coconut fibre will be gaining

       additional market as a future trend. At this moment, Korean

       consumers are not much interested in combination of latex and

       coir yet since they are not familiar with coconut fiber.




                                                                          17

				
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