SEOUL — Thanks to the popularity of South Korean television series in China, a wave of Chinese capital is flowing to South Korea.
For the first half of this year Chinese investment to South Korea reached $70.8 million, an increase of more than 600% compared with the same period last year. Investment in real estate and leasing came out top with the catering and cultural industries following — with a six-fold and a twenty-fold annual growth respectively.
And indeed, cultural exports is exactly what South Korean has been promoting to China most.
Just last month Sohu, a fast-growing Chinese Internet company, invested 90 million RMB ($14.6 million) in KeyEast, a South Korean entertainment agency, to take a 6% stake. While KeyEast’s goal is to use Sohu to enhance its influence in the Chinese market, Sohu is hoping to acquire KeyEast’s content and strengthen its edge in licensing distribution.
From now on Sohu will enjoy the exclusive right of broadcasting KeyEast’s production in China as well as promoting the Korean actors managed by the South Korean firm who have massive numbers of Chinese fans.
Among Korean cultural production, its television drama series are undoubtedly the most attractive for the Chinese. According to the data of a South Korean trade association, South Korean drama series make up 73.4% of the country's cultural products most favored by the Chinese — far higher than its music (8%), and films (4.9%).
It’s estimated that by 2015 more than 370 million China’s households will be watching web television. “South Korean television dramas have over 1.5 billion fans worldwide, a third of which comes from China,” says Han Jiyuan, director of South Korea’s Investment Promotion Bureau.
Market share means investment opportunities. In the view of Rui Tingmin, South Korea’s Investment Promotion Bureau’s project manager, there are multiple ways for the two Asian neighbors to partner in order to increase the entertainment exchange, including adding a Chinese touch to the South Korean dramas.
“The best would be to have cooperation right from the planning stage. While the Koreans work on the content addressed to China, the Chinese could take charge of the funding and market development," said Rui Tingmin. "Not only will this add value to the drama, but the joint promotion of the two cultures will also boost growth for both of them.”
Chinese capital is already being invested in a number of South Korean cultural industries in the forms of indirect advertisement, co-production and direct funding. Chinese product placement in South Korean television dramas is a favored approach.
The garment industry is another flagship industry of South Korea in the Chinese market. In 2013, Seoul's garment industry employed more than 100,000 people, far more than Milan and Paris. The density of shops and shopping centers in the South Korean capital is also more than three times that of Milan, New York and Paris.
South Korean apparel sells particularly well in China. According to the Korea Trade Investment Promotion Agency, 80% of Chinese tourists go to the country just for shopping. And on their shopping list, the priority is 55% for clothes and 21% for shoes.
Again, much of the explanation for the Chinese success of South Korean fashion goes to the popularity of the television dramas, such as My Love from the Star, a very successful series that piled up 3.7 billion clicks of Internet traffic alone.
Another factor behind the garment trade boom is that Chinese and Korean women are similar in height and build, and South Korea is seen as China as having more sophisticated design. It is worth noting that some 60% of Chinese apparel companies have hired South Korean designers.
“However, the cooperation approach that the Chinese are most interested in is to buy shares directly rather than setting up factories in South Korea”, said Li Weicun, Secretary-General of China Private Equity Association.
In order to promote trade in the two countries’ apparel industry, South Korean and Chinese governments are planning to contribute jointly to a $600 million “South Korean-Chinese garment fund.” The plan calls for Chinese to be responsible for the logistics and production while the Koreans take on planning and design.
“Exporting from South Korea to countries with which it has free trade agreements is a great advantage," says Han Jiyuan of South Korea’s Investment Promotion Bureau. "South Korea has already signed this kind of agreement with 46 countries and is hoping to sign one with China at the end of this year. Then our cooperation with China will be even more diverse and thorough in the future.”