Hot stuff coming from Korea
From Kimchi to the latest tablets, Korean goods have swept across the globe. Cultural merchandise is no exception. Since the Korean wave ― aka Hallyu ― began in 1999, Korea's global cultural appeal has surged. Korean TV soaps first hooked Chinese and Japanese viewers. Not long after, the country's music and movies climbed up Asian media charts. Today, Hallyu has spread across other regions, getting a strong reception in the U.S. whilst attracting a growing audience in Latin America, the Middle East and Europe. Consequently, cultural goods accounted for roughly 1.2 percent of Korea’s GDP in 2011 ― and are set to play a greater role over the coming years.
Among the most fascinating aspects of Hallyu is its resilience. The strong appeal of Korean culture has been sustained for over a decade as new trends have been continually generated. Take the music industry for example. Korea's largest music producers, SM Entertainment and YG Entertainment, each introduce one to two new artists every year from a pool of around 40 trainees. Training is well known to be extremely tough with many artists able to sing in at least two languages, maximizing their chances of success at home and abroad.
Recently, Korean music started to diversify away from its "K-pop" stronghold. Some hip-hop artists have debuted overseas, with the genre dubbed "K-hop". Whilst their achievements will take some time to measure, this already demonstrates the industry's determination to innovate and break into foreign markets. Such an approach differentiates Korea from regional competitors, who have been less willing to move away from their comfort zones.
Indeed, there are three key reasons why Korea's entertainment industry should continue increasing its interaction with the international community.
First, foreign markets are bigger. The U.S. music market is valued at roughly $4 billion, over 30 times that of the domestic market. Second, profit margins are greater overseas. In Japan, Korean music CDs and concert tickets are sold at roughly three times the price they are at home. Third, and more importantly, a strong track record of cooperation between nations will aid the entrance and acceptance of cultural goods even if their historical backgrounds vary widely. Look at Korea's movie industry, which adopted a localization strategy to break into the Chinese market over five years ago. By providing capital and participating in co-production with local companies, Korean filmmakers were able to establish important links to ease through China's policy barriers.
Beyond entertainment, the tourism industry may also benefit from surfing the Korean wave. "Film-induced tourism" benefited from with the popularity of Korean movies, especially among fans from Asia who now make up roughly 80 percent of visitors each year. Potential for further growth is great ― the share of tourism as a percentage of GDP and total employment in Korea is among the lowest across Asia. That said, the relationship between cultural goods and tourism numbers runs both ways. Visitors who enjoyed their stay in Korea are also more likely to consume Korean cultural goods back at home.
Hallyu will be precious for the Korean economy in 2012. While traditional shipments headed into the New Year sluggishly, cultural goods started strongly. Superstars Girls Generation made their U.S. debut with a live performance in The Late Show with David Letterman, marking a significant milestone for the group in entering the world's largest music market. With the wave still rolling strongly, not only will exports be supported, but tourism could also receive a healthy boost. This will help sustain employment and keep Korea's domestic demand firm in a troubled world economy.