The Korean wave refers to the Korean entertainment and popular culture phenomena mainly in the form of K-Pop music, TV dramas, and movies that has taken Asia and the world by storm. Known as “Hallyu” in Chinese, the term was first used in 2000 to describe Chinese fans’ enthusiasm for K-pop boy band H.O.T. during their concert in Beijing. The Korean Wave began in the 1990s with the first K-Pop band and acclaimed films in the 1990s. Korean television dramas found a receptive audience in Japan, China and Southeast Asia in the early 2000s. The wave gained momentum when K-Pop music began to really take hold in Asia in the late 2000s and spread its tentacles around the world. Korean popular music, television and film all have carved out large audience for themselves in the international market.
Hallyu literally means "Flow of Korea". It evolved from a regional development into a global phenomenon, carried by the Internet and social media and the proliferation of K-pop music videos on YouTube and Korean dramas picked up by television networks all over the world. Since the early 2000s, South Korea has been as a major exporter of popular culture and recipient of pop culture tourism, with the Korean Wave now accounting for a significant portion of the Korean economy. The South Korean government has supported K-Pop’s creative industries through subsidies and funding for start-ups, with the aim of making South Korea a leading exporters of culture. [Source: Wikipedia]
Aja Romano wrote in Vox: “South Korean pop culture has grown in prominence to become a major driver of global culture, seen in everything from Korean dramas on Netflix to Korean skincare regimens dominating the cosmetics industry to delicious Korean tacos on your favorite local menu. And at the heart of Hallyu is the ever-growing popularity of K-pop — short, of course, for Korean pop music. K-pop has become a truly global phenomenon thanks to its distinctive blend of addictive melodies, slick choreography and production values, and an endless parade of attractive South Korean performers who spend years in grueling studio systems learning to sing and dance in synchronized perfection. [Source: Aja Romano, Vox, February 26, 2018]
Koichi Kato and Ken Moriyasu of Nikkei wrote: “When it comes to entertainment, South Korea seems to know what audiences want. Many of its dramas feature intriguing, glamorous stories based on familiar themes, such as love triangles, romance between people of different backgrounds or family relationships. Musicians and pop stars put on dazzling performances that combine passionate singing, complex and flamboyant dance moves, and even amusing chitchat in foreign languages...The success of South Korean entertainment has opened doors for some of the country's other industries. Many South Korean fashion and cosmetics retailers have been ramping up their earnings in Asia through sales promotions using South Korean actors and musicians who have become household names in the region, either through TV appearances or stage performances. These companies are now trying to refine and enhance this strategy by incorporating images of South Korean stars into all stages of their operations, from development to sales.” [Source: Koichi Kato and Ken Moriyasu, Nikkei, January 8, 2015]
The gigantic Seoul metropolis, home to nearly half of the country’s 52 million population, it remains the focal point of the entertainment industry, despite government efforts to delocalize and relocate state organizations including the Korean Film Council (KOFIC) and Korea Media Rating Board. [Source: Patrick Frater, Variety, December 8, 2020]
K-Pop Becomes a Big Deal
South Korea’s entertainment industry reached a new level in 2020 when film “Parasite” won four Oscars — including Best Picture, Best Director and Best Original Screenplay and Best Foreign film — and pop acts BTS and Blackpink became global phenomenas and topped the U.S. pop music charts. There is also growing international demand for Korean TV shows.The value of the industry is said to be in the billions of dollars.
“Hallyu has been building for two decades, but K-pop in particular has become increasingly visible to global audiences in the past five to 10 years. South Korean artists have hit the Billboard Hot 100 chart at least eight times since the Wonder Girls first cracked it in 2009 with their crossover hit “Nobody” — released in four different languages, including English — and the export of K-pop has ballooned South Korea’s music industry to an impressive US$5 billion industry.
Maria Sherman wrote in Cosmopolitan:“The thing about K-pop is that while other music might make you feel moody or mad at your ex or over it all, K-pop makes you feel good. The sticky, upbeat songs never get unstuck from your brain, and you don’t want them to. Artists are both memes and icons, putting on the kinds of performances that require all caps to describe. Impressive for a class of music that’s new (ish): It really took off in 2012 around the time Psy’s hit “Gangnam Style” went viral. Today, it’s a multibillion-dollar business. Boy band BTS brings in US$3.6 billion to South Korea’s economy every year all by themselves. And that’s just at home. Across the world, stadium-size shows routinely sell out. When BTS added a last-minute stop in New York City to its 2019 tour, tickets were gone in less than 20 minutes. Stars regularly appear on morning shows, late-night TV, and red carpets proselytizing K-pop’s peppy, polished reputation. It’s what they’re asked and allowed to do. [Source: Maria Sherman, Cosmopolitan, March 10, 2020]
JYP, SM and YG: the Three Companies That Control K-Pop
Three three entertainment giants dominate the K-pop industry: JYP Entertainment, SM Entertainment and YG Entertainment. Lee Young-ho wrote in Variety: “The oldest and largest entertainment company in the K-pop world, SM (named for founder Lee Soo-man) gave birth to the first generation of pop bands in the late ’90s and created the first K-pop wave with talents like H.O.T., S.E.S. and BoA. “Since then, SM has since grown into a major conglomerate. In addition to idol sensations like Super Junior, Shinee, Exo, TVXQ and Girls Generation, it also produces stage musicals and TV, develops K-pop-themed travel merchandising, and manages actors like Jang Dong-gun (“No Tears for the Dead”) and Kim Ha-neul (“Blind”) through its subsidiary SM C&C. [Source: Lee Young-ho, Variety, May 11, 2016]
“Established by Yang Hyun-seok, former member of legendary boy band Seo Tae-ji & Boys, YG is known for its hip-hop and electronic dance music with artists like Psy, Big Bang and 2NE1. When Psy’s “Gangnam Style” became a global hit (2.5 billion views and counting on YouTube), Scooter Braun — the talent manager who also reps Justin Bieber — approached YG and helped Psy and 2NE1’s singer CL make soft debuts in the U.S. market. YG also operates subsidiaries for fashion model management, beauty and sports.
Founded in 1997 by J.Y. Park, a pop star in his own right, JYP Entertainment initially rose to fame with boy band god and singer-actor Rain (“Ninja Assassin”) in the early 2000s. In 2008, its girl group Wonder Girls was one of the first K-pop acts to find Pan-Asian success with “Nobody.” JYP’s more recent lineup of talents includes 2PM, Miss A, Got7 and Twice, all featuring members from other Asian countries in an effort to appeal to the region. Park also produced a music video with Conan O’Brien during the comic’s visit to South Korea.
SM Entertainment, YG Entertainment and JYP Entertainment revenues rose toUS$326 million in 2012, more than triple the figure in 2009, with most of that growth coming from overseas. The three entertainment companies made almost US$400 million in 2013. [Sources: Choe Sang-Hun, New York Times, August 9, 2013; John Power, Mashable, February 29, 2016]
Korean Pop Industry Run like Hyundai and Samsung
Euny Hong wrote in Quartz: The Korean pop industry is run like Korea’s chaebols (giant Korean conglomerates). Hyundai and Samsung are much closer models to Korean music companies than are EMI or Columbia records. There are only three big Korean recording companies (SM Entertainment, JYP Entertainment, and YG entertainment), and they own all the distribution channels and every point of entry. Independent talent agencies are insignificant; record labels do all their own recruiting. [Source: Euny Hong, Quartz, November 16, 2012]
“They don’t find the star; they make the star. Tiffany, a member of Girls’ Entertainment, was discovered in a California mall and trained for three years and seven months before ever appearing in public. Like the Monkees or Menudo, the bands exist before the members are picked. There is virtually no room for a Bob Dylan type to start out strumming in coffeeshops and rise out of obscurity.
“No US record label would invest the resources to train performers for that many years. A lot can happen to a teenager between the ages of 14 to 18: they could go to another label or turn to drugs. The Korean recording contract, by contrast, is airtight. The performers in K-pop bands are usually not even allowed to date. At all.
“The structure of the J-pop industry is superficially similar to that of Korea, but it’s always had one major difference: Japanese pop music is much more experimental and often avant-garde (think of the Plastic Ono Band). They even went through a rockabilly stage in the 1960s (“rokabiri”) and play around with cross-cultural hybrid sounds. South Korean tastes, meanwhile, are factory-made and conventional: the country has never had a hair band.
S.M. Entertainment Marketing
Andrew Salmon wrote in Forbes: “For a look inside S.M. Entertainment 's K-pop marketing machine, stop by the Lotte Young Plaza department store in central Seoul this summer. For two months South Korea's top record label and music talent agency is branding the six-story building with a giant banner of its latest act, EXO, a boy band aimed at the Korean and Chinese markets. S.M. has taken over the basement with a pop-up store selling everything from bags, clothing, folders and postcards to collector's edition CDs of Girls' Generation, Super Junior and the company's other groups. Some fans buy multiple copies of the same Girls' Generation CD, which are packaged with different covers for each of the nine members. [Source: Andrew Salmon, Forbes, July 31, 2013]
In the mid 2000s, “South Korea, with its advanced broadband and mobile phone infrastructure, became the first country where digital music sales surpassed physical sales. But booming digital sales hammered pricing as online music outlets aggressively slashed prices in an effort to kill piracy. So with music-sales earnings evaporating, S.M. began deploying its artists more widely. Helped by their squeaky clean images, the K-pop singers signed on for product placements, TV appearances, roles in musicals and endorsement deals. Concert revenues and merchandizing became a bigger part of the business.
“Like South Korea's manufacturing conglomerates, Lee realized that profits beckoned abroad. As the hallyu, or Korean Wave, of pop culture washed across Asia, S.M. jumped in, becoming the first Korean label to join with overseas players, notably Japan's Avex Group. Mark Russell, author of Pop Goes Korea , says that was key to breaking into a music market 20 times as big as South Korea's. Today S.M. maintains overseas offices in Japan, China, Hong Kong, Thailand and the U.S., and language lessons are an important part of S.M.'s training programs.”
Complex and Sometimes Toxic Aspects of K-Pop Culture
AJ Willingham of CNN wrote: “While BTS' success has relied heavily on their messages of non-conformity and self esteem, their fame still exists within what some consider a problematic industry that purposefully limits the privacy and individuality of its stars. (After all, K-pop idols are usually not even allowed to date, lest they ruin the fantasy of attainability for their fans.) It's also a widely held observation that K-pop's heavy reliance on perfection and precision reflect stringent expectations and social norms that are commonplace in Korean culture as a whole. In February, South Korea's Ministry of Gender Equality and Family released guidelines warning that the homogenous, highly-groomed K-pop "look" could cause some fans to develop skewed standards of beauty. [Source: AJ Willingham, CNN, April 14, 2019]
“"Beauty standards of music shows is a serious problem," the guildelines said. "Most of them are idol band members but they don't represent various appearances (of society)." The guidelines were pulled days later after a deafening outcry from K-pop fans, who likened the guidelines to censorship.
“This complex stew of expectations can sometimes turn toxic, and the K-pop world is currently being rocked by an ongoing scandal surrounding some of its biggest stars. To make a long story short, some male K-pop idols have been implicated, and some even arrested, in connection to a digital sex scandal. Four K-pop idols have admitted to taking part in a group text where men shared illicitly filmed videos of women. Seungri, a member of the hugely popular group BigBang, is being investigated for his connection to a popular Korean nightclub where police say staff members supplied prostitutes to VIP visitors. For some, the scandal — which doesn't involve BTS — reveals ugliness that can fester under K-pop's veneer of perfection, and speaks to a larger culture of toxic masculinity in Korea that is increasingly attracting criticism.
K-Pop and K-Drama Money Machine Spreads to Beauty and Fashion
Choe Sang-Hun wrote in the New York Times: “K-pop stars frequently are the faces for top South Korean brands in television commercials, and Psy fronts for a range of products, from Hite beer and Samsung refrigerators to a line of cosmetics for men called Man’s Balm. [Source: Choe Sang-Hun, New York Times, August 9, 2013]
Hideo Shinada of Nikkei Entertainment wrote: “The Korean wave has a ripple effect beyond the content industry. TV shows and movies feature a wide array of South Korean home appliances, cars and cosmetics, creating demand for those products among overseas audiences. A growing number of consumers have likewise developed an interest in South Korean food and fashion through entertainment, and many of them shop at South Korean chains. [Source: Hideo Shinada, Nikkei Entertainment, January 8, 2015]
Ryan General of Nextshark wrote: “A huge part of the world has collectively embraced two of South Korea’s main exports: K-pop and K-drama. Their influence has so far transcended into fashion and even beauty standards in many countries, creating a huge market for Korean beauty products and fashion brands. International companies, including top luxury brands, have started pouring investments into Korean products after realizing the enormous market potential brought about by the “Hallyu” phenomenon, according to Asia One. [Source: Ryan General, Nextshark, September 4, 2016]
“TV drama celebrities and K-pop artist endorsements have played huge roles in Korean companies’ international success in the cosmetics and fashion industry. L Capital, a subsidiary investment bank of LVMH (Louis Vuitton, Fendi and other brands), for instance, invested US$50 million into Korean brand CLIO, according to Reuters. The brand, which was founded by Han Hyun-ok in 1997, had its products initially manufactured in Europe before moving its production to its own manufacturer. When Korean actress Kong Hyo-jin wore CLIO eyebrow liner in the movie “The Producers,” the company earned a record sales of 100 billion won, or about US$90,485,000, in 2015, registering more than double of what it sold from the previous year. The movie was an international success, especially in China where it was a huge hit.
“Similarly, Goldman Sachs Group and Bain Capital Private Equity have made some significant Korean investments by acquiring a stake in Carver Korea, a popular cosmetics firm in South Korea, Reuters reported. Carver Korea owns several cosmetic brands, including Vivito, Dr. MJ, Shara and A.H.C., selling over 1,000 products sold through various channels. Since 2013, company earnings have surged from 27.3 billion won (US$24 million) to 156.5 billion won (US$140 million) in 2015.
“South Korean company Have & Be Co. Ltd, the parent company of cosmetics-maker Dr. Jart which produces the hugely popular BB cream, is also set to get a huge investment, this time from renowned cosmetics brand Estee Lauder, according to The Telegraph. Founded by young entrepreneur Lee Jin-wook, the company will get international exposure through Estee Lauder’s global network. Lee currently owns 66.7 percent of the company, which is worth around 17.8 billion won (US$15.9 million).”
Using K-Pop to Move Products
In 2016, CNBC asked: “How did a country with a relatively small population, living in an area only a little bigger than Indiana, become a popular culture giant, influencing global habits from hairstyles to fried chicken? Euromonitor's experts have studied South Korea's outsize impact on consumer goods, discovering the strategies that pushed the Asian nation to the forefront of cool and supported the sales of its consumer products. [Source: CNBC, June 10, 2016]
“Here's how Korean FMCG (fast-moving consumer goods) companies built their brand cachet: 1) Celebrity endorsement: Product placements in trendsetting Korean dramas has helped boost sales of everything from food such as fried chicken to beauty products. "The most unique and interesting strategy for South Korea manufacturers and government is South Korea's pop-culture, from the hit song, 'Gangnam Style' to the latest popular drama series, 'Descendents of the Sun'," wrote Singapore-based Euromonitor International research manager Warangkana Anuwong. "K-Pop has increased awareness regarding Korean products and lifestyles among audiences around the world. This soft approach has helped the Korean government set up companies and brands to succeed in other countries, since consumer demand is already prevalent globally,"
2) “International expansion: Asian countries are the top choices for South Korean companies to expand into, with emerging market Vietnam topping the list as only few international brands have set up shop in the Southeast Asian nation so far. About 33 percent of the 400 South Korean companies Euromonitor surveyed said they had expanded their brands into Vietnam.
“While economic giant China ranks second on the list for expansion targets, with 28 percent of 400 companies expanding into the country, its market size in terms of value terms dwarfs other markets, noted Euromonitor. Other developing economies also feature heavily in the top 10 list for South Korean companies. These include Indonesia, the Philippines, Thailand, Malaysia and Russia. South Korean companies are also moving into the U.S. and Europe. In 2015, Samsung phones had a 8 percent lead in the share of retail volumes over Apple's iPhone in Western Europe.
3) “Innovation: South Korean companies invest heavily in product development, such as cutting-edge technologies in consumer tech, and new beauty packaging systems, such as the compact cushion sponge that has been adopted by beauty giants like the L'Oreal Group.
4) “Fast product development: Beauty companies such as AmorePacific and LG Household and Health Care thrive on short product-development cycles in order to keep up with the latest trends, such as stamping Line characters on packaging and plastering gingerbread men on products over the Christmas season.
5) “Localization: While Korean pop culture may be successful in penetrating certain markets and consumers groups, companies are quick to customize products to cater to certain markets. Samsung, for instance, offers different apps for its smart TVs in the UK, France and Germany. A smaller example is kitchenware company PN Poong Nyun, which in 2013 launched a line of frying pans specially made for cooking everyday Indian dishes such as curry and naan. Two months after the product launched, the company had 10,000 of the pans.
South Korean Government Support of K-Entertainment
John Seabrook wrote in The New Yorker: “The Korean government has promoted hallyu, using it as a form of “soft power,” by making South Korea the Hollywood of Asia. Hallyu has erased South Korea’s regional reputation as a brutish emerging industrial nation where everything smelled of garlic and kimchee, and replaced it with images of prosperous, cosmopolitan life. Thanks to mini-series such as “Winter Sonata,” a 2002 romantic drama that was a huge hit throughout Asia, middle-aged Japanese women now swoon over Korean men, while complaining about the “grass-eating” — that is, lacking in virility — males of Japan. Korean ancestry used to be a stigma in Japan; now it’s trendy. At home, K-drama’s success has brought tourists from all over Asia to visit the sites depicted on the screen.” [Source: John Seabrook, The New Yorker, October 8, 2012]
Hideo Shinada of Nikkei Entertainment wrote: The South Korean “government has lent a hand” to South Korea's entertainment industry, “with a policy of promoting entertainment and other cultural exports. Since the 1998 currency crisis, each president has pitched in. Kim Dae-jung called himself a "cultural president," Roh Moo-hyun vowed to make South Korea one of the top five nations in the entertainment industry, and Lee Myung-bak set up a national branding committee. [Source: Hideo Shinada, Nikkei Entertainment, January 8, 2015]
“In 1999, South Korea increased its entertainment-related budget sixfold in a year. In setting up the Korea Creative Content Agency, or Kocca, the nation created a joint public-private effort to pitch South Korean entertainment to the rest of Asia. The result? A boom in the popularity of South Korean TV dramas and the emergence of the "Korean wave." In 2012, 279.8 billion won (US$253 million at the current rate) of the national budget was allocated to the cultural-content industry and 118.8 billion won to the media industry, reportedly about eight times Japan's allocations. The nation's exports have been growing along with this effort, from US$2.3 billion in 2008 to US$4.6 billion in 2012.
Kat Chow of NPR reported: “In the late '90s, when Asia went through a huge financial crisis, South Korea's leaders decided to use music to improve its image and build its cultural influence. So the country's government poured millions of dollars into forming a Ministry of Culture with a specific department devoted to K-pop. "It turns out that the Korean government treats its K-pop industry the way that the American government treats its automobile and banking industry, meaning that these are industries that have to be protected," Euny Hong, the author of The Birth Of Korean Cool, said. This included doing things like building massive, multi-million dollar concert auditoriums, refining hologram technology, and even helping regulate noeraebangs — karaoke bars — to protect the interests of K-pop stars. "They wanted Korea of the 21st century to be like America of the 20th century where America was just considered so universally cool that anything made in America would automatically be bought." [Source: Kat Chow, All Things Considered, NPR, April 16, 2015]
AFP reported: “Prominent music critic Kang Hun and others rejected suggestions that promotions by the Seoul government had helped sell K-pop overseas as its home markets become more saturated, saying it jumped on the bandwagon belatedly.” [Source: Jung Ha-Won, AFP, June 23, 2013]
SM, JYP and YG in China
SM, JYP and YG have all made inroads in the West, but China remains their largest market. Lee Young-ho wrote in Variety: “China’s music market — like its film market — has become one of the world’s biggest in recent years.” After first gain attention in China in the early 2000s, “the Korean music industry responded quickly, recruiting Mandarin-speaking talents to appeal to the Chinese fanbase. And the Korean entertainment industry has seen a huge influx of Chinese cash — as much as US$2.5 billion over five years — a move welcomed by Korean companies that have looked to expand to the Chinese market with fewer legal obstacles. [Source: Lee Young-ho, Variety, May 11, 2016]
“Major examples of such investments include Chinese e-commerce giant Alibaba’s purchase of a 4 percent stake in SM Entertainment for US$29.7 million. In addition to setting up online music distribution, marketing and merchandising in China through Alibaba Music Group, SM is also set to establish a Chinese branch via Hong Kong-based subsidiary Dreammaker Entertainment. “Our goal for this year is to set up a subsidiary in China similar to our local subsidiary in Japan and pursue the Chinese market more aggressively,” an SM source told Variety.
“The other two majors are following suit. In 2014, YG signed an exclusive music distribution contract with Chinese Internet giant Tencent, the developer behind messaging service WeChat. JYP has also signed a music distribution agreement with China Music Corp. that is worth US$4.56 million with plans to launch a China-based joint venture in the near future.
Korean Dramas Create Blockbuster Products in the Chinese Market
Koichi Kato and Ken Moriyasu wrote in Nikkei: South Korean entertainment reigns supreme in China. The figures say it all. The most popular TV Korean drama of 2014, "My Love From the Star," was watched a total of 2.8 billion times on Chinese streaming site iQIYI.com. The silver-sparkled Jimmy Choo high heels worn by lead actress Jun Ji-hyun, also known as Gianna Jun, in the second to fourth episodes disappeared from stores, not only in China and South Korea, but also in places like Dubai and London, where Chinese travelers sought them out. In April 2014, when Jimmy Choo opened its first store in Shenyang, northeast China, all 50 pairs of the US$800 pumps sold out in almost no time. [Source: Koichi Kato and Ken Moriyasu, Nikkei, January 8, 2015]
“Although just a few hundred pairs of the shoes were originally produced, Jimmy Choo executives, seeing their worldwide appeal, decided to produce several thousand more. Each handmade shoe takes four months to complete. It was a similar story for the Mondo backpack by Samsonite that lead actor Kim Soo-hyun carried over his shoulder as the show's handsome alien. Samsonite did not pay for a product placement. Kim reportedly decided to use the bag because he liked it. The backpack went on sale two days after the episode aired in January and sold out within a week.
“Because Samsonite hadn't received any notice that Kim would be using the Mondo, they didn't have enough of the backpacks to keep up with demand, resulting in missed sales opportunities. "After seeing the tremendous demand for the product, we stepped up our production to speed up restocking," said Leo Suh, Samsonite's president for Asia-Pacific and the Middle East. "By having our marketing and merchandising teams work closely with our suppliers, we managed to reduce our lead time for the product from 60 days to 45 days," he told the Nikkei Asian Review.
“When the Korea Trade-Investment Promotion Agency, or KOTRA, held a seminar for Korean restaurant chains in Dalian last fall, four of the nine companies that attended offered fried chicken. In "My Love From the Star," main character Song-yi, played by Jun, celebrated the first snowfall of the year with a meal of fried chicken and beer. In Dalian, posters of a smiling Jun can be seen promoting Kentucky Fried Chicken, Paris Baguette bakeries, bags of potato chips and a local department store. She will soon be the face of Gucci.
K-Pop Success Boosts the Entire South Korean Economy
A 16-episode Korean drama called “Descendants of the Sun — a military romance between a soldier and surgeon — which first aired in Korea in February 2016, was viewed more than 2 billion times on China’s online streaming site iQiyi, angering Chinese authorities who have warned of the social ills of excessive viewing of Korean dramas. Song Jung-a, wrote in the Financial Times: However, the warning has failed to cool Korean drama fever in China. About 4,500 employees of a Chinese cosmetics group recently visited South Korea for a Hallyu experience. The trip included a dinner party with fried chicken and beer — a food combination that has become popular in China after the 2013 Korean drama My Love from the Star — and then visited filming locations of the hit drama. [Source: Song Jung-a, Financial Times, April 12, 2016]
“Hallyu is breathing life into South Korea’s slowing economy amid the declining competitiveness of its smokestack industries. In contrast to waning demand for steel, microchips and cargo ships — which have driven the country’s rapid industrialisation over half a century — exports of cultural products hit a record US$5.3bn in 2014, with an annual average growth rate of 13.4 per cent for five years since 2010. “I see great potential in the country’s creative industries as a new growth driver,” says Woong Park, president of Eastspring Investments, a British asset manager. “The economy can no longer succeed with its old formula, because the Chinese are now better at it, investing aggressively to build scale in traditional manufacturing industries.”
“Korean companies, on the back of the country’s growing soft power, are now increasingly focusing on areas that have been boosted by Hallyu. AmorePacific, the country’s biggest cosmetics company, in 2015 enjoyed a 44 per cent year-on-year jump in overseas sales as the country’s cool image gives a marketable cachet to consumer goods abroad. CJ E & M, the media unit of the family-run CJ conglomerate, is seeing its overseas sales grow more than 20 per cent a year while Netmarble Games, South Korea’s top mobile game company, is planning a Won2tn initial public offering as exports of Korean games reached nearly US$3bn in 2014, accounting for more than half of the country’s cultural exports.
“Iconix, a small animation producer, became the country’s biggest revenue generator on YouTube as its Pororo penguin and Tayo bus characters won the hearts of children worldwide. South Korean culture had long been overshadowed by its bigger neighbours, China and Japan, but has punched far above its weight in recent years, as the country, which grew from the ashes of the Korean war to become the world’s sixth-largest exporter within a generation, offers something unique but still universal for global audiences to relate to.
“The country, heavily influenced by the U.S. culture in the past, has successfully combined some magic formula from Hollywood with Asian sensibilities and tastes,” says Yoon Ho-jin, a director at Korea Creative Contents Agency. “Those who love Korean dramas and pop music have developed a liking for Korean products and come to visit Korea.” Hallyu has also boosted South Korea’s popularity as a tourist destination, with 13m foreigners visiting the country last year — up from 8.5m in 2010.
“The main beneficiaries of Hallyu such as AmorePacific and CJ E & M have become the darlings of investors. AmorePacific is now the country’s eighth-largest stock with its market cap reaching nearly US$20bn while CJ E & M was added to the MSCI Korea index last November instead of struggling industrial giants Daewoo Shipbuilding and Marine Engineering and Hyundai Merchant Marine. “We’ve learned what works in Asia and beyond by trial and error over the past two decades,” says Mike Suh, senior vice-president at CJ E & M. “I believe Hallyu will last for the next 10 years at least, which means infinite opportunities for content exports.”
“However, there are growing concerns over how long South Korea can maintain its cultural edge in the region as China tries to tap into the country’s magic touch. Its rival has made deep inroads into South Korea’s “creative economy”, investing US$2.5bn in Korean games, movies and entertainment over the past five years, according to the country’s Small and Medium Business Administration. Chinese companies have taken over some Korean producers such as Chorokbaem Media with some famous Korean TV producers moving to China while more Korean entertainment companies partner with cash-rich Chinese firms to produce content together. “Fortunately, the battle in this business is more about creativity and effective planning than lowering production costs like in manufacturing,” says Mr Suh. “But I am not sure how long we can have the upper hand here. China is catching up fast in this industry too.”
BTS Alone Generates Almost US$5 Billion A Year
According to a report titled “Economic Effects of BTS” published by the Hyundai Research Institute in December 2018, BTS's annual production inducement effect is estimated at 4.14 trillion won (US$3.67 billion). The report also estimated that BTS generates 1.42 trillion won (US$1.26 billion) annually in added value. Choi Moon-hee wrote in Business Korea: “The institute projected that 796,000 foreigners on average have visited South Korea for BTS-related reasons every year since the group’s debut in 2013. BTS-related exports have totaled US$1.12 billion (1.26 trillion won), including US$233.98 million (264.28 billion won) in clothing and accessories, US$426.64 million (481.89 billion won) in cosmetics and US$456.49 million (515.61 billion won) in foodstuffs, over the same period. In short, BTS is estimated to have been responsible for 7.6 percent of the 10.4 million foreign tourists who visited the country last year and 1.7 percent of consumer exports last year. [Source: Choi Moon-hee, Business Korea, December 19, 2018]
“The HRI said it analyzed BTS’s contribution to the South Korean economy since its debut in July 2013 by quantifying the search volume in “Google Trend” and analyzing the impact on the value chain over tourism and consumer exports context. When the popularity of BTS increased by one point, the number of foreign tourists went up by 0.45 point three months later, exports of clothing and accessories by 0.18 point, cosmetics by 0.72 point and foodstuffs by 0.45 point in the same month. The HRI expects that BTS will generate an economic value of 41.86 trillion won (US$37.06 billion) and an added value of 14.3 trillion won (US$12.66 billion) for 10 years between 2014 and 2023 if the band continues to maintain its popularity.
BTS’s estimated annual economic value of 4.1 trillion won is 26 times larger than the average medium-sized company in Korea, which earned just 159 billion won in 2016 according to the report. On factors that contributed to the success of the group, the reported said: “All BTS members participate in the songwriting and composing, often writing from their own perspective the concerns of young adults in their teens and twenties, and listeners are able to sympathize with them regardless of their nationality. BTS’s albums and concerts are also structured in a way that has a narrative, which helps attract the attention of fans and raise their expectations for upcoming albums and concerts as well.” Other factors mentioned include active communication with BTS fans - known as ARMY - through social media and the fans’ strong support. [Source: Kim Eun-jin, Joongang Daily, December 18, 2018]
Image Sources: Wikimedia Commons.
Text Sources: South Korean government websites, Korea Tourism Organization, Cultural Heritage Administration, Republic of Korea, UNESCO, Wikipedia, Library of Congress, CIA World Factbook, World Bank, Lonely Planet guides, New York Times, Washington Post, Los Angeles Times, National Geographic, Smithsonian magazine, The New Yorker, “Culture and Customs of Korea” by Donald N. Clark, Chunghee Sarah Soh in “Countries and Their Cultures”, “Columbia Encyclopedia”, Korea Times, Korea Herald, The Hankyoreh, JoongAng Daily, Radio Free Asia, Bloomberg, Reuters, Associated Press, BBC, AFP, The Atlantic, The Guardian, Yomiuri Shimbun and various books and other publications.
Updated in July 2021