Globalization and Consumer Markets in East Asia

Myeongdong

A Review of Making East Asian Consumers: Market Formation and Evolution of Demand in Japan, South Korea, Taiwan, and China, by Solee Irene Shin.

Over the last four decades, the East Asian Tigers have experienced unprecedented growth, which has transformed agrarian societies into modernized and industrialized economies. People’s daily lives and consumption patterns have also changed rapidly. In Myung-dong, one of the biggest and most crowded shopping districts in Seoul, the most famous global fashion outlets, including Polo Ralph Lauren, Gap, Zara, and Guess, have replaced domestic brands. Instead of going to open-air markets, Koreans now shop for groceries in hypermarkets such as Lotte Mart and E-Mart. Similar consumption patterns can be seen in Japan and other countries.

Solee Irene Shin’s dissertation tackles a long-standing debate: Does globalization make the world similar or different? Through an extensive comparative study of Japan, South Korea, Taiwan, and China, this dissertation investigates very interesting and timely issues: the rise of organized retailing in East Asia and whether the consumer markets in East Asia are localized or globalized.  Looking at this phenomenon from the perspective of economic sociology and the sociology of organizations, Shin argues that market makers, as intermediary market players between producers and consumers, have played a critical role in shaping domestic consumer markets in East Asia. Using market research and survey data, Shin convincingly shows that, although there is an increasing level of convergence and standardization of retail structures across countries, the historical specificity of national cultures and domestic business structures also create local-specific business landscapes and consumer markets. This overall argument is supported by interesting case studies of retail markets, K-pop, and the fashion industry.

Borrowing from organizational theory, chapter 2 builds on the theoretical framework, emphasizing organizational characteristics of business firms and their business strategies. Shin characterizes each country’s dominant business system: For example, Taiwan has a large number of small- and medium-sized specialized firms and business groups, whereas both Korea and Japan have a small number of large business groups. These different patterns of business organization affect the development of the retail sector differently. In contrast with simple explanations that focus on the diffusion of Western models and global convergence, Shin’s approach is rather aligned with the new institutionalism that emphasizes that the market is a social construction and the economic system is embedded within society. Furthermore, Shin’s path dependence approach also highlights how variations of domestic retail structures have developed in East Asia. The particular historical trajectories of business development have shaped the patterns of development of domestic retail and consumer markets.   

In Chapter 3, the first empirical chapter, Shin examines the retail markets in Taiwan, Korea, Japan, and mainland China, finding a divergence between these countries. For example, global retailers have proliferated in the Taiwanese retail market. By contrast, in both Korea and Japan foreign retailers have been less successful, due to the dominant market position of domestic business groups and their effective blockage of foreign companies. These cases confirm the idea that the global diffusion of types of business organization varies across different social contexts and local institutions.

Chapter 4 is a very detailed case study of a single product market: Korean popular music, or K-pop. Examining the increasing popularity of Korean cultural products such as movies, soap operas, and music, this chapter seeks to explain how the Korean Wave has arisen and how Korean culture has become so successfully globalized over such a short time period. Conventional wisdom has focused on unique characteristics of Korean culture (such as nostalgia or the hybridization of Western music forms with Korean dance and visual imagery), the government’s promotion of K-pop, and technological changes. Shin, by contrast, pays particular attention to the role of large Korean entertainment houses as innovators and market makers for K-pop. The entertainment houses cultivated their own brand images and changed the entire popular music industry. Adopting more globally conscious strategies and developing a star system, these corporations targeted a global market for Korean pop culture.     

Chapter 5 looks at consumption markets in East Asia through the lens of the fashion industry. As in the other empirical chapters, here Shin emphasizes the role of market makers (intermediary contractors, distributors, retailers, and local producers of apparel products) in shaping regional and national production landscapes as well as consumer tastes. Different domestic firm structures and histories of industrial production create different models of fashion production in these countries. Whereas Japan has produced globally recognized fashion designers and brands, Taiwan is dominated by Western products; Korea is between these two models. Market makers adopt three different strategies in shaping local demands. First, as gatekeepers, they select the particular brands and goods that will enter the domestic markets. Second, they localize the price structures. And last, they utilize locally tailored marketing and image-making strategies to appeal to potential customers across different countries.

Shin concludes that there is a common pattern across the countries—the adoption of standardized retail structures and technologies—that corroborates the convergence model. Yet, at the same time, nationally specific patterns that result from particular business trajectories and institutions cannot be ignored. Shin’s dissertation brings a new perspective to bear on different consumption patterns across different countries by focusing on the business strategies of market makers. This mid-level explanation bridges the gap between the micro-level explanations of individual meaning-making and symbolic communications, and the macro-level approaches based on supply and demand. Social scientists and students interested in Korean and Northeast Asian studies, globalization and development, consumption patterns, and economic sociology will find Shin’s dissertation to be an informative and interesting read.

Myungji Yang
Department of Political Science
University of Hawai‘i at Mānoa
Myang4@hawaii.edu

Primary Sources
Euromonitor

Dissertation Information
University of Washington. 2014. 223 pp. Primary Advisor: Gary G. Hamilton.

Image: Myeongdong, Seoul. From Wikipedia.

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