Hallyu doesn’t guarantee start-ups’ success, experts say

The “Korean in Asia 2022” annual start-up get-together was held at the Naver D2SF start-up support center in Gangnam, southern Seoul on Tuesday. [STARTUP ALLIANCE]

The rising popularity of K-pop and Korean dramas has made Hallyu seem like a guarantee for success in overseas markets, but that may not always be the case, venture experts said at an annual start-up get-together held Tuesday.

Organized by the Startup Alliance, “Korean in Asia 2022” is an annual event that invites Korean entrepreneurs working in Asian countries to share their experience and hardships of doing business overseas. It was held at the Naver D2SF start-up support center in Gangnam, southern Seoul.

This year’s speakers included executives from cosmetics company Limese, fintech company Fin2B and digital content company VNG Corporation.

“I call it the fantasy of Hallyu,” said Jo Tae-moon, chief strategy officer of DaouKiwoom Innovation, the Vietnamese subsidiary of DaouKiwoom tech company.

“It’s true that having the face of BTS stuck on a product will increase revenue,” Jo said. “But if you take into account the licensing price that you would have paid, it’s possible that the revenue doesn’t cover the whole cost.”

According to Jo, the importance of studying the local market is not just about the numbers, such as consumer statistics or market volume. For instance, the Vietnamese market is open to Korean culture but its consumption power is weak, which is why the Hallyu strategy may not be as effective as companies hope.

“It could just end up being a waste of money,” he said. “Simply put, it will be easier if you start thinking that nothing will go as you planned. The company structure will have to be changed, employees will need to be let go but even that might not be so easy.”

Other speakers emphasized minor details that companies tend to look over but prove important for building local networks.

“It’s important to build a trust-based relationship, but it’s difficult to know just how to get others to trust you,” said Kevin Choi, head of the Japanese branch of DalcomSoft, a game developer specializing in K-pop music games.

DalcomSoft has released music rhythm games such as SuperStar SMTOWN, SuperStar BTS, SuperStar JYPNATION and more.

“It’s important that you care about the details when you’re meeting with potential partners,” Choi said.

“For instance, if you’re meeting a company in the local market for the first time but you don’t know a word of their language or the translator seems ignorant of your business model, then that can take off a lot of points.

It’s also important to talk to the “right people,” according to Choi.

“There’s always bound to be the so-called ‘key man’ who can get the business going much quicker than others. It’s crucial that you get inside the inner circle and figure out who the key man is within the company you want to target,” he said.

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]