“This Beat Cha-Ching Like Money”: Hallyu’s Impact on South Korea’s Economy
Avid K-pop fans – with an ever-growing number of the world’s population identifying as such – will recognize that this article’s title draws from BTS’ hit song “Dynamite.” While “this beat cha-ching like money” accords with the boy band’s carefully curated playful and confident image, it also speaks to a greater truth that the ever-growing popularity of South Korean culture has dramatically bolstered the country’s economy. Recently, the South Korean Ministry of Culture, Sports and Tourism projected that “Dynamite” alone could generate 1.7 trillion won ($1.43 billion) of economic activity and nearly 8,000 new jobs. These staggering numbers not only reflect the sheer star power of a single group, but also how, over the last several decades, South Korea has managed to produce, market, and export its cultural capital with astounding success.
In 1997, the increasing global popularity of South Korea’s cultural exports led journalists in China to coin the term Hallyu, which translates simply to “Korean wave.” Notably, 1997 also ushered in the Asian Financial Crisis, which caused South Korea's GDP to drop 18.5% between 1996 to 1997 and resulted in a $58 billion bailout package from the IMF, including strict instructions for economic reform. This juxtaposition of rising global prominence against economic turbulence set into motion a greater interest in the already developing industry of producing and exporting South Korean dramas, music, and films. Initially, these exports were primarily distributed to other East Asian countries, who, like South Korea, had been impacted by the financial crisis. According to sociologists Chua Beng Huat and Koichi Iwabuchi, the period following the 1997 Asian Financial Crisis contributed significantly to South Korea’s ability to strengthen its pop-culture exports because East Asian countries were no longer able to purchase their preferred, but relatively expensive, Japanese dramas. Furthermore, the diminishing presence of large chaebol (family-owned business conglomerate) firms in the film industry allowed new players and venture capitalists to enter the sphere, generating innovation and leading to a 525% increase in film exports from 1997 to 1998.
Alongside the budding success of television drama and film industries, the late 90s witnessed the birth of three music studios: SM Entertainment in 1995, JYP Entertainment in 1997, and YG Entertainment in 1998, who remain the major players in the K-pop industry to this day. While K-pop had roots before the formation of these companies, its true genesis began in 1996, when SM Entertainment founder Lee Soo Man gathered a group of multi-talented performers and created the first Korean idol group, H.O.T. The five-member group’s charismatic and hyper-stylized mixture of singing, dancing, and good looks soon generated acclaim in the rest of East Asia. H.O.T.’s February 2000 concert held in the Beijing Workers’ Gymnasium represented a critical turning point in K-pop history. Its immense success prompted SM entertainment to begin “[professionalizing] its business and [systematizing] its globalization strategies” by signing a joint venture with Avex Entertainment in Japan and creating foreign branch offices across Asia and North America.
However, success comes at a cost. As SM Entertainment gained international footing and revelled in the financial gains from album and concert ticket sales, it also found itself on the receiving end of damning accusations from its star performers. In a contract negotiation, H.O.T. members revealed that they received merely $10,000 for every 1,000,000 albums sold. To put this into perspective, Taylor Swift’s “Lover” was the only album to sell a million copies in the U.S. in 2019. Tellingly, member Tony Ahn lamented that he felt like a “perishable commodity” while under SM Entertainment's management. The highly-publicized dispute, which resulted in H.O.T. disbanding, exposed the underpinnings of K-pop as an immensely profit-driven industry that engages in borderline unethical practices to produce as great a return on investment as possible. While the idea of such objectification repulses, the K-pop industry undeniably relies upon a factory-like production standard in which companies only retain those who can generate monetary gain and even then, its treatment of idols remains questionable. Since H.O.T., not much has changed regarding working condition standards. In 2009, three members of K-pop group TVXQ attempted to sue SM entertainment, contesting their unfair contracts and profit distribution. In recent years, members of groups from smaller entertainment companies have also spoken up about how most performers receive little to no compensation until they successfully repay their parent companies for training, housing, and music production costs. Christine Park of former idol group Blady has stated that the amount of money invested into idols greatly exceeds what the majority of groups can expect to earn throughout their careers. Evidently, K-pop entertainment companies operate on a capitalistic principle that prioritizes financial gain above consideration for the wellbeing of their clients.
The ethics of cutthroat bottom lines and commodifying individuals remain questionable, but little doubt can be cast upon the fact that groups who manage to succeed not only yield benefits for their parent companies, but also for South Korea’s economy as a whole. The early aughts gave companies time to perfect the K-pop formula of catchy songs, flashy choreography, and charismatic members with clearly distinguished personalities. By the time the internet democratized access to Korean pop culture in the 2010s, television dramas and idols alike were ready for their close up.
The success of television dramas slightly preceded that of K-pop largely due to the popularity of Winter Sonata (2002), which compelled 650,000 tourists to visit Korea’s Nami Island in 2002. However, in the preceding years, the debut of idol groups Super Junior (2005), Big Bang (2006), SNSD (2007), and 2NE1 (2009) in rapid succession catapulted music exports. Armed with two great cultural exports, South Korea prepared to reap the rewards of its pop culture industry’s careful planning. Astonishingly, total content exports rose to $5.27 billion in 2014, with an annual average increase of 13.4% from 2010 to 2014. In addition to export revenue, the late aughts and early 2010s witnessed an influx of tourism from those flocking to Korea, eager to experience the locations in which their favourite dramas were set and to visit the hotspots of their revered idol groups. To accommodate this increased interest, the official Korean tourism website has built pages dedicated to outlining the filming locations of the country’s most prolific television dramas.
Super Junior, Big Bang, SNSD, and 2NE1 have since disbanded, and Winter Sonata approaches its 20th anniversary, but the Hallyu wave has shown no signs of slowing down. In fact, the current iteration of Korean pop culture represents a new and even more profitable frontier: North American domination. K-pop has had brushes with widespread North American recognition in 2012 with PSY’s Gangnam Style. However, BTS and Black Pink’s aggressive advancement campaigns in the past few years mark the most successful infiltration of the American market to date. In 2018, BTS’ album “Love Yourself: Tear” became the first K-pop album to top the Billboard 200 chart. In 2020, Blackpink and BTS have both reached the coveted first place spot on Billboard’s Artist 100 chart. These achievements follow closely on the heels of these groups’ appearances on various American television and awards shows, dating back to as early as 2017 for BTS. Rather than ringing hollow, such American appearances, collaborations, and awards have translated directly into profits. South Korean shipment of music goods reached $640 million in 2020, up 13.4% from the previous year. According to the Korean Times, these improved numbers stem from an increase in demand from North America and other parts of the world. Furthermore, Hallyu related exports rose to $12.3 billion in 2020, up 22.4% from 2018. With its recent crop of cultural exports, South Korea continues to prove that it has its finger on the pulse of global consumer demand.
Where demand exists, supply follows. South Korea understands that its K-pop idols and television dramas have the potential to yield immense financial power. 2020 marks the country’s largest culture budget to date as the National Assembly has allotted $429.7 billion to fund the culture ministry’s activities. The immense value of this investment speaks to the government’s desire to further cultivate its brand of pop-culture that has continued to evolve alongside ever-changing trends without missing a beat.