The New Korean Wave catches a tailwind of popularity in China
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1 The New Korean Wave catches a tailwind of popularity in China C. Min Han Professor, Division of Business Administration Hanyang University The fervor for Korean pop culture in China is showing no signs of cooling down. Currently, most television dramas from Korea s three major broadcasting networks are broadcast simultaneously on China s over-the-air TV channels, as well as on Internet TV channels. Famous Korean actors and actresses, including Kwon Sang-woo, Jang Seo-hee, Jang Woo-hyuk, and Nam Gyu-ri, appear on Chinese dramas. The so-called Korean Wave, or Hallyu, started with television dramas. Recently, however, the genre that has been leading the New Korean Wave in China is K-pop and its idol groups. News about K-pop music and idol groups is being broadcast in real-time via digital broadcasting and the Internet. Among the many K-pop artists, Tiara, Girls Generation, Big Bang, and Jang Na-ra are very famous in China. Almost immediately after the release of Big Bang s new album, the group had four new songs listed at the top of Chinese music charts. 015
2 Korean movies are also popular in China. Late Autumn, starring Hyun Bin, ranked second in the China box office as soon as the movie was released in March of this year. Hallyu in China is expanding to various cultural areas, including not only dramas, K-pop, and movies, but also food, games, fashion, tourism, and consumer products. China s growing cultural appetite spurs Hallyu First, the Hallyu fervor in China is attributed to the fact that the number of middle class has increased with rising income, along with their desire for cultural outlets. Perhaps cultural output in China is lagging behind China s economic and social growth and its rising international standing. Hallyu marketing of quality cultural content has played a pivotal role in the popularity of Hallyu in China. The fact that Chinese people feel empathetic towards Korea, both cultures being Asian, is giving impetus to the Korean Wave. While the Chinese receive Western cultural content as merely stories of foreigners and their culture, they can easily relate to the themes and values embedded in Korean cultural content. Korean stars are seen in China as easy to emulate. This phenomenon leads to de-westernization. American pop music and Hollywood movies, loved by many young Chinese people in the past, have lost their popularity of late. Of course, Japanese cultural content is also popular in China. However, Korea is in a more favorable position than Japan, perhaps because of the anti-japanese sentiment in China. The charm of Korean stars is another reason for Hallyu s success. According to a survey, Chinese people think that Korean stars are beautiful, elegant, and personable. The popularity of K-pop is largely dependent on the charming appearance of its stars. For this reason, the fashions and hair styles of K-pop stars are in vogue, and an increasing number of Chinese tourists are coming to Korea for plastic surgery. 016 POSRI Chindia Quarterly Summer 2012
3 Third, widespread Internet broadcasting has played an The effects of Hallyu have been important role. In the mid-2000s, proven in many areas. Hallyu the popularity of Korean TV has promoted Korea s national dramas dwindled temporarily, image, and boosted interest in and understanding of Korea. after the Chinese government imposed restrictions on imported television programs. However, viewership of Korean dramas has increased again through Internet broadcasting, and the number of viewers in their teens and twenties has surged exponentially. Hallyu leads to good brand images The effects of Hallyu have been proven in many areas. Hallyu has promoted Korea s national image, and boosted interest in and understanding of Korea. Hallyu also has positive economic effects. A national image is created through indirect experiences with a country s cultural content, such as TV shows, movies, and advertisements, and through direct experiences, such as traveling to a country, meeting with its people, and using products from that country. Chinese people are learning about Korea directly and indirectly by watching Korean dramas, listening to K-pop, visiting Korea to see Korean stars, exchanging with Koreans, and using Korean products. A recent study on Hallyu states that Chinese people who have good feelings toward Korean dramas and entertainers have favorable images of Korea. With their increased interest in Korea, Chinese people s interest in the Korean language has also increased. In 1992, when Korea and China established diplomatic relations, there were only five schools in China offering Korean language classes; currently, more than 200 schools are teaching Korean. The number of Chinese tourists to Korea has also surged. 017
4 The number of Chinese visitors to Korea rose from 340,000 in 2003 to 2.05 million in In particular, the number of Chinese tourists visiting Korea for plastic surgery keeps rising. In 2011, the South Korea Embassy in China issued 1,073 medical treatment visas for plastic surgery to Chinese citizens, four times more than the previous year. Hallyu contributes to an increasing preference for and sale of Korean products in China. Orion, a Korean confectionery company, sold as many Choco Pies in China as it did in Korea last year. Other Korean companies, such as Paris Baguette, Nolboo, and Genesis BBQ, are also enjoying rapidly increasing sales. Hallyu also has a great impact on the Korean cosmetics industry. Korean cosmetics are very popular among Chinese women, and are the most popular shopping item among female Chinese tourists to Korea. The effects of Hallyu have been proven through various studies. Korean companies are utilizing favorable images of Korea created by Hallyu as a means of marketing. Hallyu stars are commonly hired as models for advertisements. As the diagram illustrates, the effects of Hallyu are created from Korean cultural content and favorable attitudes toward Hallyu stars. The effects of Hallyu on the images of Korea and its products Favorable perception of cultural content National image Product image Favorable attitudes toward Hallyu stars Hallyu marketing Source: Author 018 POSRI Chindia Quarterly Summer 2012
5 Preference for Korean cultural content improves Korea s national image, and that improved national image is passed on to the image of Korean products. When Korean companies adopt Hallyu marketing, favorable attitudes toward Hallyu stars can lead to good images for Korean products through affect referral. Affect referral is a marketing term that describes the phenomenon of existing sentiments and attitudes being transferred to a product. Some people argue that Hallyu stars have a greater influence on the image of Korean products than Korean cultural content does. A series of empirical studies shows the effects of Hallyu stars. To take advantage of these effects, Korean companies have adopted active Hallyu marketing, using Korean stars as models. However, not all Korean companies have to adopt Hallyu marketing, because existing favorable feelings toward Korea are enough to improve the image of Korean products. Companies can expect positive effects if they can be clearly identified as Korean companies with Korean values. Mutual understanding is needed to quell rising anti-hallyu sentiment Along with the Hallyu fervor, anti-hallyu sentiment is also mounting in China. In 2006, China restricted television programs imported from Korea in order to protect its cultural industry. There are various reasons for the anti-hallyu sentiment: the sudden fleeing of certain Korean companies from China, and Shanghai Automotive s failed investment in Ssangyong Motor. With Korea s increased exchanges with the USA and Japan, some Chinese people think Korea will disregard China, deepening anti-hallyu sentiment. In order to prevent anti-hallyu sentiment from spreading, Korea should avoid excessively nationalistic or culturally chauvinistic content. Also, content that has the potential to distort history should be ascertained using 019
6 historical evidence and verified in a balanced way. Most of all, Korea and China must strive to respect and understand each other s cultures. To continue the spread of Hallyu in China, all economic players the government, companies, and citizens must work together. First, the Korean government should clearly recognize Hallyu as an important asset that improves the country s brand image. Hallyu can have a great influence not only on Korea s image, but also on the images of Korean companies and products. The Korean government must detect anti-hallyu sentiment at an early stage, and devise an active management system to quell such sentiment. Korean companies must also take the lead in preventing anti-hallyu sentiment from spreading. As responsible corporate citizens, they must endeavor to forge amicable relations with their Chinese employees and partners. If the favorable image of Korea dissipates, companies will be the biggest victims. Korean citizens should be wary of excessive nationalism and cultural chauvinism. They should have an open attitude of understanding and respecting other cultures. The government, companies, and citizens must all understand that their concerted efforts are necessary to maintain the favorable image of Hallyu, Korea, and Korean products, and subsequently increase the international standing of Korea. 020 POSRI Chindia Quarterly Summer 2012
7 Entry strategies into China focusing on Hallyu content and target lifestyles Kim Pil-soo Senior Business Analyst of Hyundai Research Institute China is the fastest growing cultural consumption market in the world. According to PricewaterhouseCoopers (PwC), a global consulting firm, China accounted for 6.0% of the global entertainment and media market in 2010, and is expected to grow by 11.6% annually on average to account for 7.9% of the global market by This means that China will become the world s third largest cultural market, after the USA and Japan. Hallyu s leading role in globalizing Chinese demand It is worth noting that the Korean Wave, or Hallyu, has emerged as a major cultural phenomenon in China. Around the year 2000, during the early stages of Hallyu, Southeast Asia was its epicenter. Hallyu has recently gone global, with K-pop at its forefront. The presence of Hallyu in China is the result of Hallyu s global market strategy, and evidence of the 021
8 increasingly cosmopolitan tastes of Chinese consumers. Currently, Hallyu presents an opportunity to attract future consumers in China s vast market. The majority of Hallyu consumers in China are young. Their desire for refined, global cultural products is rising as a result of Hallyu. Various manufactured products can appeal to Chinese consumers, using Hallyu as a lever. It is high time to discuss a way to build a strategic framework for entry into the Chinese cultural market, which is emerging as one of the fastest growing cultural consumption markets. Using Hallyu within the framework of strategies for entry into China Cultural diffusion is comprised of four stages: first, exposure to cultural products; second, increasing cultural consumption; third, increasing consumption of products directly related to culture; fourth, aspiration to certain lifestyles and increasing consumption of products, even indirectly related products. Entry strategies using Hallyu are associated with the third and fourth stages. A matrix can be drawn for entry strategies using Hallyu, with each axis divided into two segments. The first axis is divided into The size of Chinese entertainment and media market 2,000 1,500 1, Market size (Left; USD 100M) Share in the global market (Right, %) Source: Global Entertainment and Media Outlook , PwC 022 POSRI Chindia Quarterly Summer 2012
9 strategies directly associated with Hallyu content and entertainers, and those associated with Chinese lifestyles. The other axis is divided into first-mover strategies and follower strategies. First-mover products attracting consumers The first strategy involves marketing first-mover products, using cultural content and entertainers directly (A-1). A related case is ipad, released in April of Following its release, ipad got frequent exposure through movies, television dramas, and other TV programs. Many cultural products utilize product placement (PPL) marketing in connection with media. However, first-movers and leading products benefit the most from this kind of indirect advertisement. Consumers are willing to pay for the new utility of first-mover products. Follower products cannot benefit as much because consumers have to replace products that they are currently using, and bear the extra cost of replacement. Therefore, replacement cost naturally feels more burdensome than the expense of a new product. This is clearly demonstrated by how few people purchased GM automobiles after watching the Hollywood blockbuster Transformers, which has many scenes featuring GM cars. Direct use of Hallyu stars and content to market follower products The second strategy involves marketing follower products, using cultural content and entertainers directly (A-2). Under this strategy, a follower product can be given direct exposure by Hallyu characters using the product in Hallyu content. For example, Korean citron tea is a follower product in China, which has advanced tea culture. Following the success of the Korean TV drama Dae Jang Geum in China, Chinese grocery stores held tasting events for Korean citron tea, dressing their clerks in hanbok, traditional Korean costume. The tea soon became a 023
10 best-selling product. In this case, they used Hallyu content directly in marketing. In addition, there is the conventional method of having entertainers in a product advertisement. Japanese cosmetic brand DHC used Korean stars for its advertisements in China, and the strategy was successful. One Chinese cosmetic brand recently finished shooting an advertisement using Korean actress Jun Ji-hyun as its model, targeting Chinese consumers. Japanese and Chinese brands are making the most of Hallyu. This strategy is more effective for price-competitive products or non-durable consumer goods (with less than one year of use after purchase), because these kinds of products require relatively low expense for replacement, making consumers less troubled by the decision to buy follower products. More importantly, it is significant that Hallyu fans desire to use products that their adored stars use can be satisfied with relatively little expense. Utilizing adoration of certain lifestyles The third strategy involves marketing first-mover products associated with attractive lifestyles (B-1). A good example is the American Matrix of marketing strategies utilizing cultural content A. Directly related to cultural content and entertainers 1 First-mover - Direct exposure of products within cultural content - Leading product image 2 Follower - Exposure of product through direct experience and cultural content - Induce market learning B. Related to lifestyles - Strong connection between product and plot in cultural content - Blending with local culture - Creating cultural content based on products - Stimulating the hidden desires of consumers Source: Hyundai Research Institute 024 POSRI Chindia Quarterly Summer 2012
11 television sitcom Sex and the City and the brunch culture. Brunch (breakfast + lunch) refers to a meal eaten in between the normal times of breakfast and lunch. This Western custom has become popular among young Korean women. Now it is regarded as a familiar consumption pattern. Of course, brunch is not a kind of product. However, if an American restaurant brand released brunch items, utilizing the popularity of When entering the Chinese the sitcom, the brand market, the most important factor to consider is respecting would become a firstmover. Instead, small the Chinese people s pride for their own culture. Emphasizing restaurants in Korea have only Korean characteristics can made the most of brunch have a negative effect. culture. What is important here is that product consumption is well mixed with the story of the sitcom. Scenes in which the main characters chat over brunch are frequently depicted throughout the program. This new consumption pattern hit home with many young Korean women, who yearn for the fabulous lifestyle of women in New York. As this case shows, aspiration for a particular lifestyle can be connected effectively to product consumption. In the past, Chinese and Japanese people regarded kimchi and other Korean foods as foreign food. With the popularity of Korean television dramas, Korean food has become a new custom among Hallyu fans aspiring to Korean lifestyles. Creating new cultural content based on products The last strategy involves marketing follower products associated with certain lifestyles (B-2). Within this strategy, it is not easy to succeed without localization of products and brand flexibility. As followers, such products have to offer different value from that of existing products, or 025
12 target niche markets. Therefore, such products should create their own cultural content so as to be recognized by consumers as first-movers. Korean home shopping companies with a presence in Shanghai continue to grow by differentiating themselves from indigenous Chinese companies with Korean style entertainment features on their programs. Korean bakery chain Paris Baguette established a luxury brand image in China, appealing to the upper classes. It also added the concept of café culture to bakery shops, growing faster than European brands in the high-end Chinese bakery market. These are examples of followers playing the role of first-movers. Let us take a look at Starbucks, which has entered the global market by creating its own café culture. When Starbucks entered the Korean market, there were many coffee shops in Korea. However, after Starbucks opened branches in Korea, many indigenous coffee shops disappeared and were replaced by coffee shop chains similar to Starbucks. Stories with an Asian sense of kinship When entering the Chinese market, the most important factor to consider is respecting the Chinese people s pride for their own culture. Emphasizing only Korean characteristics can have a negative effect. Cultural trade-off should be taken into account. The more Chinese people embrace Hallyu, the more China s value of its own culture diminishes. In this sense, Korean companies that have already entered the Chinese market using Hallyu must endeavor to accept local culture and seek mutual exchanges. Naturally, it is better to avoid a strategy of imitating the image of a leading brand that has a strong presence in China. Chinese consumers already have cosmopolitan cultural tastes. Even though Hallyu is popular in China, Hallyu is not the only foreign cultural code. If Hallyu is pitted against the image of Starbucks or McDonald s, which have already created their own culture in China, it cannot beat the competition. 026 POSRI Chindia Quarterly Summer 2012
13 In conclusion, it is important to create brand stories with Asian values. The Asian sense of kinship is a sure path for Korean culture to become more popular than Western culture. It is necessary to create brand stories blending Hallyu and Chinese culture. This might be the strongest weapon for entering the Chinese market through culture. More than ten years have passed since Hallyu entered China, and its ripple effect is now reaching other cultural products. I hope that more Korean bands will prosper in China thanks to Hallyu. 027
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