The wave of Korean pop culture, or hallyu, was started with TV dramas and celebrities. Now, the world is captivated by Korean pop music. The latest proof that hallyu is spreading worldwide was seen recently when Korea’s hottest girl group, Girls’ Generation, performed on America’s top late-night talk show with David Letterman. The leading economic daily Financial Times wrote a piece about how K-pop, growing increasingly popular in the west, helps to further boost Korean exports. Today, we have Dr. Seo Min-soo서민수 of Samsung Economic Research Institute to discuss the economic impact of the expansion of Korean pop music. First, he tells about the relationship between hallyu and the Korean economy.
Hallyu and the Korean economy are closely related. Our research center analyzed the input-output structure of various industries and found that K-pop, belonging to the so-called cultural service industry, is influential on TV shows, film, broadcasting, advertising, retail, restaurants, fashion, and cosmetics. Forward production induction effect was highest in the broadcasting and advertising sectors in which K-pop serves as a key intermediate material. In terms of backward production induction effect, K-pop was highly related to the wholesale and retail, restaurant, information services, and cosmetics industries. The K-pop fever not only generates direct economic benefits, but also heightens Korea’s national image and product awareness. It is considered a valuable strategic asset. One research institute estimated the economic impact of the new hallyu to be around 4.98 trillion won or 4.42 billion U.S. dollars as of 2010.
Hallyu is closely tied to the economy. In terms of direct export of pop culture contents, the export of TV shows and other broadcasting contents last year posted 252 million dollars, music exports topped 177 million dollars, and film exports were around 26 million dollars. More and more foreigners find Korean culture attractive. The number of foreign tourists to visit Korea in 2011 increased 32.1% from the previous year, and the Korea International Trade Association found that three out of four foreigners purchased Korean-made products after becoming familiar with Korean pop culture. As hallyu began to generate immense economic wealth, corporations have begun to pay attention to the reasons driving hallyu’s success.
There are several factors to the success of hallyu, especially K-pop. First, music producers and management companies have systemized the entire star-making process, from casting and training to producing and global promotion, and are prepared for overseas markets. This system entails a training program that weeds out a large part of a talent pool to select a very few with star potential. This training process is Korea’s own competitiveness. In spreading K-pop, Korean producers use YouTube, Facebook, and other social media to cut the time and cost of entering the overseas markets. The K-pop fever owes its quick spread to proactive consumers who are tech-savvy, culturally curious, and vocal about their likes and dislikes. In terms of content, Korean idol singers are characterized by solid vocals, powerful dancing, and attractive appearance. The combination of these three features and continuous attempts to reinvent themselves have captured global consumers.
The popularity of hallyu first began in the late 1990s when Korean dramas were hugely sought after in China. On the other hand, K-pop was at the periphery of the world music scene. However, for the past decade or so, Korean music producers have trained young singers with the complete package – singing, dancing, and style – to win over the audiences in not only Asia, but also in North America, Latin America, and Europe. They have also approached the young, IT-savvy consumers of the world through social media outlets, such as YouTube and Facebook. Last year the number of hits on K-pop uploads on YouTube recorded 2.3 billion, indicating how worldwide Korean music has become. Can the success of K-pop recreated in Korean businesses?
From the start, K-pop aimed for the global market and systematically trained young talents over a long period of time. K-pop was able to succeed by reinventing the strengths of Korean culture. The business world needs to develop products and services unique to Korea and choose those people who have solid fundamental skills. In the long run Korean businesses should also invest to boost customer accessibility and product quality. Latecomers whose brands are not that well-known or companies pioneering new markets should extensively expose their brands to local customers to build a broader demand base.
The global success of K-pop imparts many lessons for the Korean business world. Rooted in Korean values yet stylishly reinvented for the global market – this is a way to make products and contents appealing to the world. Korea’s new export targets – eleven Asian nations including China, India, Thailand, and Vietnam, four Latin American countries such as Brazil and Mexico, and five Middle Eastern nations including Saudi Arabia and Iran – coincide with the hot beds of the new hallyu fever. It would be easier to export to these nations if Korean exporters capitalized on K-pop’s popularity. How should Korean businesses take advantage of the Korean wave?
Korean pop music is Korea’s biggest cultural asset that generates a lot of money. We need five strategies to enjoy the same level of success in other industries. First is to create added value with derivatives. The game and animation industries could develop characters based on K-pop content or Korean celebrities, and the musical or drama sectors could incorporate Korean pop songs or singers into their productions. Also, tourism products combining K-pop contents, tourism, and shopping should be developed, and places with strong pop culture implications should be made into landmarks to attract foreign tourists. Another strategy is to maximize the publicity effect by launching collaboration advertisements with K-pop singers. Lastly, K-pop fans could serve as the hosts of introducing Korean products in a new market. In this case, Korean businesses should use YouTube and other social media channels to design detailed export strategies for each region.
The world-renowned fashion house H&M worked together with Madonna and the esteemed Louis Vuitton, along with hip hop superstar Kanye West, to create huge hits. K-pop could serve as a new export engine for the Korean economy if the business world can also take a hold of the hallyu fever.