Beijing doubles down on Korean soft power
Take, for example, the hit Korean TV drama “Descendents of the Sun,” which first aired in late February and came to an end last week with a Nielson Korea rating of 38.8 percent. The show was made with a 53.5 billion won ($46.6 million) investment by China’s largest production company HUACHE Media in October 2014.
No other Korean drama has hit such a figure in the last four years, not even “My Love from the Star,” which was so successful it forced the government to change export-related regulations because of its huge popularity in China.
When it ended in February 2014, “My Love from the Star” reported a rating of 28.1 percent.
“Descendents of the Sun,” which centers on the romance between a Korean special forces operative and a doctor in the fictional country of Uruk, is expected to generate more profit than “My Love from the Star,” which is estimated to have made over 1 trillion won, a figure that includes sales of the famous coats that the protagonist wore on the show, cosmetics products and OST record sales.
In fact, the 5,400 Chinese tourists who recently held an unprecedentedly large chicken-and-beer party, or chimaek party, in Incheon were actually taking part in an activity that became widely known in China through “My Love from the Star,” which aired between late 2013 and February 2014.
“Descendants of the Sun” is estimated to generate 3 trillion won in profits, according to the Korea Culture and Tourism Institute.
The show sold the viewing rights for all 16 episodes to Baidu’s video-streaming affiliate, iQiyi, for 240 million yuan, or 4.3 billion won. This translates to 300- million won per show.
The rights have also been sold to 31 other countries including the UK, France, Italy and Germany.
The culture and tourism industry is hoping to make the most of this opportunity by creating packages related to the show, including visits to the areas where the show was filmed such as mining neighborhoods, military bases and even coffee shops.
The immense success that a single Korean show, backed by China, is enjoying just a glimpse at the aggressive wave of Chinese investments flooding the Korean market in recent years.
Chinese investors’ interest has shifted from manufacturing industries, such as LCD panels or semiconductors, to the service industries including entertainments, real estate, finances and start-ups.
Much of these investments are related to hallyu, or the Korean cultural wave, but China’s activities are not limited to buying shares or making investments; they also include recruiting talented game designers and computer programmers and developers.
These investments are particularly welcomed by small and midsized Korean companies that have been struggling to find investments in the local market.
In fact, the company that produced “Descendents of the Sun,” NEW, was facing financial difficulties before HUACHE Media became its second-largest shareholder.
According to a recent report by the Korea Trade-Investment Promotion Agency (Kotra), Chinese investment in both the service and manufacturing sectors in Korea has grown steadily, while investments in the Korean service industry have more than doubled every year.
For example, the Chinese financial group Anbang Insurance, which was first founded in 2004, has expanded its presence to become Korea’s fifth-largest life insurer, with total assets equaling 39 trillion won when it bought Allianz Group’s Korean operation, nearly a year after it acquired another Korean life insurance company, Tongyang, in February last year.
The Bank of China also bought a joint insurance company, formed last year by Samsung and China Air.
China’s expansion into the Korean market stands in stark contrast to other foreign financial companies, which have instead been backing off in recent years.
In fact, the global investment firm Goldman Sachs closed its asset manage ment businesses in Korea in 2012, while ING Group sold off its ING Life Insurance in Korea, Citi Group sold Citi Capital in Korea and Allianz, which entered the Korean market in 1999 after acquiring the market’s fourth-largest insurance company for 400 billion won, decided to pull out after continuing losses.
Last year, Allianz’s operation in Korea reported a net loss of 87.4 billion won.
Experts say that Korea is, in economic terms, considerably smaller than most advanced economies, such as the United States or even neighboring Japan.
Nevertheless, it is an attractive investment site for many Chinese companies because of its power content development skills, its world-class talent and its advanced IT infrastructure.
Such points were made by Yan Huang, chief operating officer from China’s No. 1 antivirus developer 360 Security, during his visit to Seoul in July last year.
“Korea has the fastest internet development in all of Asia and it is a country where 79 percent of the population uses smartphones,” said the COO. “For that reason, we considered Korea an important market.”
Like 360 Security Group, Korea is a major test bed where success in Seoul would likely translate to success in other major markets.
The Korea JoongAng Daily plans to analyze the growing investments being made by Chinese investors and their impact on local industries in a series of articles this week focusing on culture and entertainment, finance, IT and real estate markets.
BY SPECIAL REPORTING TEAM: Lee Ho-jeong, Seo Ji-eun, Kwon Sang-soo, Song Su-hyun, Park Eun-jee, Kim Ji-yoon, Kim Jee-hee, Kim Young-nam [lee.hojeong@joongang.co.kr]
with the Korea JoongAng Daily
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