Estee Lauder makes empty promises in Korea

This is the final in a series highlighting operations of foreign luxury brands in Korea. ― ED.
ELCA Korea General Manager Christopher Wood

By Park Jae-hyuk

Estee Lauder has gained global popularity, selling its cosmetics brands Estee Lauder, Clinique and M.A.C at luxury boutique sections in department stores and duty free shops around the world including Korea.

Considering its disappointing track records in keeping promises here so far, critics point out the U.S. cosmetics manufacturer does not deserve its huge popularity.

According to industry officials, Monday, the company had withdrawn 30 salesclerks working for its 11 brands ― Estee Lauder, Clinique, M.A.C, Bobbi Brown, Aveda, Lab Series, Tom Ford Beauty, Origins, Aramis, La Mer and Jo Malone London ― from Hanwha Galleria Duty Free store last August, demanding equal treatment as Chanel.

Another global cosmetics maker L’Oreal followed suit by pulling out its salesclerks from the duty free store, so Galleria employees had to sell products of the two beauty giants for weeks. It is unknown how Galleria persuaded the two to deploy their staff again.

Estee Lauder’s Korean unit ELCA Korea has posted a message on its website from General Manager Christopher Wood stating, “We will establish the best relationships with retailers, media, customers and suppliers.”

Many would interpret the remark as meaning that it will not repeat such practices.

But still, Korean retailers worry the cosmetics company may come up with fresh “unreasonable” demands like last August, in particular because the duty free division of Estee Lauder is managed by the Singapore unit ― not the Korean one.

In addition to troubles with retailers, Estee Lauder has been accused of being reluctant to establish a good relationship with Korean customers either; again unlike the general manager’s commitment.

The firm has long been criticized in Korea for the relatively higher prices of its products sold here compared to other countries.

Earlier this year, the international company slashed the prices of hundreds of its products sold in China by up to 18 percent, citing a decline in customs duties last year as the reason. However, it continued to raise product prices here despite favorable tax policies.

“Country-specific pricing takes into consideration a wide range of local factors,” an ELCA Korea official said. “As the cost of doing business can differ from counrty to country, there is often a degree of cost variation across different markets and this is reflected in our suggested retail prices.”

Given that Korea is one of Estee Lauder’s largest and most lucrative markets, however, some critics say that the firm regards Korea as a mere ATM.

Although the local unit has not posted specific sales reports, the global head office said sales in Korea marked double-digit growth last year from the previous one, thus underpinning increases in the company’s sales in the Asia-Pacific region.

Not only end consumers but also employees, who would deserve compensation for their stellar performance, seem unhappy with the luxury brand.

“A discount on luxury cosmetics was the only welfare for employees,” a former Estee Lauder employee said. “Unlike most foreign companies, Estee Lauder was an authoritarian company that lacked horizontal communication.”

In contrast, the general manager wrote on the website, “Our employees are our family. We compensate those who devote themselves.”

Founded in 1946 by Estee Lauder and her husband Joseph Lauder in New York, Estee Lauder markets prestige skincare, makeup, fragrance and hair care products.

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