Korean Wave (Hallyu) – The Rise

of Korea’s Cultural Economy &

Pop Culture

The Korean Wave (Hallyu) refers to the global popularity of South Korea’s cultural
economy exporting pop culture, entertainment, music, TV dramas and movies.

Hallyu is a Chinese term which, when translated, literally means “Korean Wave”. It is a
collective term used to refer to the phenomenal growth of Korean culture and popular
culture encompassing everything from music, movies, drama to online games and
Korean cuisine just to name a few. During former president Barack Obama’s state visit
to Korea in March 2012, he made reference to the Korean Wave, which was made the
country’s top priority by the government.

South Korea is one of the only countries in the world, if not the only one, that has a
dedicated goal to become the world’s leading exporter of popular culture. It is a way for
Korea to develop its “soft power”. Soft power is a popular term coined in 1990 by
Harvard political scientist Joseph Nye. It refers to the intangible power a country wields
through its image, rather than through hard force. Hard force refers to military power or
economic power. An example of soft power in play is how the US enticed the world to
buy its Levi’s jeans, Apple iPhones, Marlboro cigarettes, Coca-Cola soft drinks and
Hollywood movies, by leveraging on a desirable image. A unique image of cool.

Hallyu first spread to China and Japan, later to Southeast Asia and several countries
worldwide where it continues to have a strong impact. In 2000, a 50-year ban on the
exchange of popular culture between Korea and Japan was partly lifted, which improved
the surge of Korean popular culture among the Japanese.  South Korea’s broadcast
authorities have been sending delegates to promote their TV programs and cultural
content in several countries.

Hallyu has been a blessing for Korea, its businesses, culture and country image. Since
early 1999, Hallyu has become one of the biggest cultural phenomena across Asia. The
Hallyu effect has been tremendous, contributing to 0.2% of Korea’s GDP in 2004,
amounting to approximately USD 1.87 billion. More recently in 2019, Hallyu had an
estimated USD 12.3 billion boost on the Korean economy.

Over the last two decades, South Korea has become very rich and very futuristic. In
1965, Korea’s GDP per capita was less than that of Ghana. Today, South Korea is the
world’s 12th largest economy.

Origins of Hallyu

The popular media in the region has attributed the origins of Hallyu to a couple of
movies and TV dramas that were released in 1999. “Swiri”, an inspiring movie about the
North Korea/South Korea espionage released in 1999, gave Hallyu the public face as it
became hugely successful across South East Asian countries. It was followed by a
drama called “Autumn in my heart” in 2000 that sustained the excitement created by
Swiri. These were followed by “My Sassy girl” in 2001 and “Winter Sonata” in 2004. All
of these became very popular not only in Korea but also in Singapore, Japan, Taiwan,
Hong Kong, China and Vietnam. The success of these entertainment products created
a tremendous buzz about the exploding popularity of Korean culture. Regional media
sources were quick enough to pick up the cues and collectively announce the birth of
Hallyu.

Although this was the public face of Hallyu, the actual origins go back further in time.
Five main factors contributed tremendously to the evolution of the Korean wave:

Lifting the ban on foreign travel for local Koreans: Probably the most important
factor which eventually made way for Hallyu, was the Korean Government’s decision in
the early 1990s to lift the ban on foreign travel for Koreans. This made way for a number
of Koreans to explore the western world, mainly the US and Europe. Many pursued their
education in these countries and others started their careers in esteemed companies in
the Europe and the US before returning to Korea during the late 1990s. These western
educated Koreans brought with them new perspectives of doing businesses, new
subtleties and interpretations to art, cinema and music and innovative forms of
expressions. This gave birth to an immense pool of fresh, young, and highly qualified
talent waiting to explore opportunities within Korea.

Restructuring of Korean chaebols: During the same time as the ban was lifted, Asia
(and Korea) was going through the severe Asian financial crisis of 1997-98. The Asian
financial crisis was a perfect storm of bad debt, panic among lenders and regional
economic challenges. In December 1997, the Korean government took out a loan of
USD 97 billion from IMF (International Monetary Fund). They ended up using only USD
19.5 billion, and the loan was paid back in 2001 three years prior to schedule. Korea
had been a poor country just a few years prior to the Asian financial crisis, and
defeating poverty was something that the country had learnt the hard way. Therefore, all
measures were used to pay back the loan and get back on track in record time.

The crisis left Korea with a serious image problem, as many global stakeholders still
believed Korea was in bad shape, so the country lost foreign direct investments, lacked
tourism, and faced global skepticism. To solve this, the incoming president Kim Dae-
Jung and the Korean head of global PR agency Edelman co-authored a book “Korea:
On Course – and Open for Business” aimed at global investors.

One of the biggest consequences of the crisis within Korea was its effect on the Korean
chaebols. Korean chaebols were highly diversified conglomerates which operated in
literally every sector of the economy from chip to ship making. The Asian financial crisis
forced these chaebols to restructure their business models by divesting many of their
business units and concentrating on their core competencies. This in turn opened up
the market internally and gave other smaller players an immense opportunity to venture
into varied businesses. More entrepreneurs emerged from the crisis emboldened by the
opportunities. Korea realized that it was dependent on the chaebols – if they failed, the
country would fail. President Kim Dae-Jung pushed for information technology and
popular culture as the two key drivers for the future Korea. Technology would create
new industries above the traditional manufacturing Korea has been dependent on since
it rose out of poverty and industrialized, and popular culture could become an important
export product worth billions of dollars – while it would help rebrand Korea.

Samsung is one of the most prominent Korean chaebols, and the implications of the
1997-98 crises gave birth to an enhanced push for internationalization by the company
and its owners as they sought new growth outside Korea. Samsung and its rise since
then have been a prominent example of how Korean firms have benefited from the
global interest in what Korea is and what the country has to offer.

Banning the censorship laws: The Korean censorship laws had prohibited movie
makers and other artists from showcasing many topics considered controversial. This
had curbed their creative independence for a long time. In 1996, the Korean
constitutional court banned this censorship and opened up a barrage of topics for artists
to explore. This move provided immense opportunities and independence to the young
and vibrant generation of Korea to express newer and bolder ideas through cinema and
music. Many influential film makers rose during this period.

Increased emphasis on branding by leading Korean companies: Some of the major

chaebols of Korea like Samsung and LG had started their branding journey by mid
1990s. There was an increased emphasis on quality, design and marketing and
branding on a global scale. These skills were rubbed off to various other sectors of the
economy as well. Collectively, there was an increased urge to improve overall quality to
provide superior goods to the world market.

Increased focus on infrastructure: The Korean government has been and is spending

significant funds to develop high-tech Internet infrastructure as it believes that every
Korean citizen will benefit from being connected to the global world. In addition to this,
Korea is one of the few countries worldwide that invests its funds into the nation’s start-
ups. In 2012, government funds constituted over 25 percent of all venture capital money
disbursed in Korea. One-third of all venture capital in Korea is spent on the
entertainment industry.

All the above things occurred at more or less during the same period in the mid-1990s.
A potent talent base of young and energetic Koreans on one hand and a very conducive
cultural environment in Korea backed up by operational excellence on the other, gave
an excellent base for young Koreans to experiment with music, drama and movies.
Movies with more controversial and never-before-tested topics were filmed, which
gained popularity across the region. Family dramas with a common sensitivity and
cultural background which appealed to a vast population of Asians also become very
popular, increasing the overall craze for Korean entertainment products. Many young
local singers and bands adapted the US rap music to suit the Korean taste and it
emerged as a big rage. These entertainment products (music, movies and dramas)
initiated the phenomenal growth of Hallyu.

Growth of Hallyu

Hallyu has consistently and exponentially grown since 1999, when it surfaced as a
major cultural phenomenon. But the growth of this wave has not been totally
spontaneous and unplanned. The five major factors discussed above shaped the
cultural environment of Korea, which led to the birth of the Korean wave. In a similar
fashion, the sustained growth and popularity of this wave has been well managed by all
its chief stakeholders.

Five important factors have been crucial for maintaining the popularity of Hallyu and
further boosting its potential to expand into other markets:

Growing popularity of Korean brands: The Korean brands are doing the exact same
thing to Japanese brands now, what the Japanese brands did to US brands during the
1960s and 1970s. Samsung and LG have been the forerunners in creating world class
brands in the consumer electronics industry. In the recent annual 2019 ranking by
Interbrand of the world’s top 100 brands, Samsung was listed as the 6th brand in the
world with brand value of USD 61.1 billion. LG has transformed itself from a
manufacturer of cheap products to a brand of repute. Hyundai and Kia brands are
creating a similar revolution in the car industry. Hyundai, which was once the source of
jokes in the US industry due to its horrible quality, is now touted as one of best quality
cars in the market and is competing head on with the Japanese giants Toyota and
Nissan. AmorePacific is South Korea’s largest beauty company and ranks 7th on
Women Wear’s Daily (WWD) list of top 10 global beauty companies.

On a collective level, the acceptance of these brands in the international market has
improved the overall perception of its country of origin – South Korea. Gradually the
world is associating Korea with Samsung and Hyundai instead of the Korean War. This
new interest in Korea has been a great driver of Hallyu.

Increased R&D in design, production and overall quality: The popularity of leading

Korean brands across the world including the US has highlighted certain key
dimensions of success for Koreans – superior quality, cutting edge designs and a
contemporary feel for the products and services. This lesson has been absorbed by
almost all business sectors. This new emphasis has seen an increased investment in
research and development in creating products of superior quality. The entertainment
products like movies, music, dramas have all been described as having excellent
production quality. South Korean movies now are of Hollywood production value and
quality. This newfound focus on quality has enticed many new customers and helped
sustain the popularity of movies, music, and dramas, which are the main products
driving the Korean wave.

As the popularity of these movies, music and dramas increased manifold in the region, it
has also resulted in increased creative output. Since 1999 to the present, many Korean
movies with innovative and appealing themes have been released.
The must-see Korean movies

 Swiri (1999)

 Joint Security Area (2000)

 The virgin stripped bare by her bachelors (2000)

 Ching (Friend) (2001)

 My Sassy Girl (2001)

 Failan (2001)

 A tale of two sisters (2002)

 Memories of Murder (2003)

 Silmido (2003)

 Old Boy (2003) – Winner of the Grand Prix award at Cannes 2004

 Spring, Summer, Fall, Winter….and Spring (2004)

 Taeguki (“Korean Flag”) (2004)

 King and the Clown (2005)

 The Host (2006)

 D-War (2007)

 Scandal Makers (2008)

 Haeundae (2009)

 The Man from Nowhere (2010)

 War of the Arrows (2011)

 The Thieves (2012)

 Miracle in Cell No. 7 (2013)

 The Admiral: Roaring Currents (2014) – top grossing Korean film of all time

 Veteran (2015)

 Train to Busan (2016)

 A Taxi Driver (2017)

  Along with the Gods: The Last 49 Days (2018)

 Extreme Job (2019)

 Parasite (2019) – made Oscar history by winning a record 4 Academy Awards at

the Oscars 2020, including being the first non-English film to win Best Picture

 Squid Game (2021)

As a result, Korean producers have been able to source capital for these movies from
countries outside of Korea, like Japan. People in many countries like Singapore, China,
Vietnam, Japan, Taiwan and Hong Kong are being treated with more and more new
movie numbers across the years. The fact that Parasite is the first non-English film to
win Best Picture at the Oscars alongside 3 other Academy Awards is testament to the
global recognition of the increasing quality and authenticity of Korean entertainment
products.

In addition to movies, Korean pop music by Korean music bands have also skyrocketed
across the last 10 years. One does not need to be a K-pop fan to have heard of bands
like Big Bang, Super Junior, PSY or Girls’ Generation. These four most popular Korean
music bands have cumulatively sold more than 238 million records worldwide. Today,
there are at least 115 active K-pop groups with an online presence and amongst these,
92 have debuted in 2010 or later. According to a report by the Korean Foundation, there
were 89 million hallyu fans in 113 countries in 2019. Out of these, over 70 million live in
Asia and Oceania, 11.8 million live in the Americas and 6.6 million in Europe. This
speaks volumes about the explosiveness and the way that Korean pop music has
proliferated the globe in the last 15 years.

Even the Korean dramas have emerged as well packaged goods with a good measure
of visual and emotional appeal. Many of the dramas have traditionally depicted exotic
and serene coastal and rural areas, and the theme has been the underlying values of
Asian audience – family melodrama with lots of emotions and innocent love. With
growing popularity across the years, the dramas today explore a wider variety of
themes, including tensions between traditional familial values and economic
development. Many of these dramas have created records of sorts.

The historical drama Dae Jang Geum or “Jewel in the palace” experienced extensive
global commercial success in Asia (Taiwan, China, Hong Kong, Japan, Thailand,
Cambodia, Indonesia, Philippines, Malaysia, Singapore, New Zealand, Brunei, India,
Bangladesh, Sri Lanka and Pakistan), Middle East and Africa, and even the Americas
and Europe. An illustration of this success would be in Hong Kong and Taiwan, where it
was the number 1 program in both countries during the time of its airing, and its winning
of the “Best Foreign Program” at the TVB Anniversary Awards 2005.

The drama Winter Sonata became so hugely popular in Japan that its male lead Bae
Yong-joon was renamed Yonsama, a title usually used for royalty. The recent
“Descendants of the Sun” television series, aired in 2016, has also enjoyed immense
success across Asia, with 1.1 billion views during the 2 months it aired.

This increase in the quantity and quality of movies, music and dramas has helped
sustain the growth of Hallyu.

Effective management of all touch points: Even though multiple factors have

tremendously influenced the birth and evolution of Hallyu, one of its drivers is careful
and effective management of all possible touch points. Touch points are the numerous
instances where the customers come into contact with Hallyu. The entertainment
industry, the different organizations involved in movies, music companies, online
gaming companies, Korean chaebols and the Korean government have meticulously
orchestrated their efforts in ensuring a consistent experience. Large event organizers
such as the 2018 PyeongChang Olympics and Winter Paralympics have also helped to
build a more positive perception of Korea. All these players have ensured portrayal of
the interesting aspects of Korean culture in their respective media. They have also
effectively optimized the use of new Korean celebrities to further the cause of Hallyu
across the region.
Continuous support from the Korean government: Korea is probably one of the only
countries in the world that has a Ministry of Culture (Ministry of Culture, Sports and
Tourism to be exact). A division of the ministry, the Popular Culture Industry Division,
focuses on Korean pop music, fashion, mass entertainment, comic books, cartoons,
and other key products. The division along with three other divisions are referred to as
the Cultural Content Office. Its budget is a staggering USD 5.5 billion, with the aim to
boost economic growth particularly through growing the country’s cultural industry
export industry. Additionally, the Korean government sponsors 20-30% of a USD 1
billion investment fund earmarked to nurture and export popular culture. The remaining
funds comes from investment banks and private companies and are managed by the
Korean Venture Investment Corporation.

One of the strategies of managing Hallyu is the careful study of its target audience –
mostly people in Asian countries. The Korean government and its divisions follow these
Asian countries and cultures closely to understand which Korean Wave products would
have the best probability of success in different markets. The secret is that no one
understands these markets better than Korea.

The Korean government has also been very active in managing Hallyu outside of Korea
by conducting different cultural festivals displaying the Korean offerings, conducting PR
campaigns to publicize Korean uniqueness and indirectly helping the entertainment
industry by creating a very conducive environment. As of August 2020, the Korean
Culture and Information Service has set up 32 Korean Cultural Centers in 28 countries
across Africa, Asia-Pacific, Europe, and America to promote Hallyu.

According to the UNESCO Institute for Statistics, the global trade of cultural goods
amounted to USD 16.4 trillion in 2017, and the Korean government is eyeing a
significant part of that pie moving forward. In her 2013 inaugural address, President
Park Geun-hye announced the Creative Economy Policy Enforcement Process. The
seven core strategies to lay the foundation for a creative economy are:

 Creation of new markets and jobs

  Development of software as a future growing business

 Realization of the creative economy through opening and sharing

 Realization of nation for start-up

 Construction of a recruitment system to look beyond specifications

 Promotion of K-Move in which Korean youths move the world

 Creation of MSIP (Ministry of Science, ICT and Future Planning)

The entertainment industry has been very proactive in feeling the pulse of the masses
and producing appealing movies and dramas. The Korean Tourism Organization (KTO)
has made the best use of this huge interest in Korea by offering very attracting tour
packages to tourists. These packages involve trips to locations made famous by the
Korean dramas, travel to exclusive shooting locations and so on.

The Korean government has also built and opened “K-Culture Valley” in Goyang, a
Hallyu inspired theme park which would house everything from film studios, Korean
restaurants, live music concerts to movie galleries, hotels, shopping malls selling
Korean celebrity merchandise and even a Korean theme park at a cost of USD 1.2
billion. The purpose of this theme park has been to put in one place all the interesting
components of Hallyu for visitors.

Lesser animosity towards Korea in Southeast Asian region: History, in a strange

way, is positively aiding Korea and the growth of Hallyu. Most Asian countries were
former colonies of Japan during the World War time. The direct result of this has been
the continuing animosity towards Japan in many Asian countries, most notably in
mainland China. This has been the main reason for Japanese music or lifestyle not
becoming a rage in many Asian countries. Korea on the other hand has been a former
colony of Japan and thus is on the same page as many other Asian countries. This has
helped Korea in both ways. The Japanese are able to identify with them as they are
closer to Japan in terms of development and sophistication than any of the other Asian
countries and therefore, Korean cultural exports have been huge in Japan.
At the same time, being a former colony of Japan, Korea and China share the same
history. The Chinese are able to relate more closely with Korean cultural products and
relate without an underlying sense of animosity and hatred. This has been a major
factor for the explosion of Korean culture in mainland China.

The spillover effects of Hallyu

The cumulative effect of movies, music, dramas and games has been tremendously
positive to the Korean economy and the Korean country image in the region. According
to the Korea Foundation for International Cultural Exchange, Hallyu contributed USD
9.5 billion to the Korean economy in 2018. Hallyu has contributed immensely to Korean
tourism as well. An opinion survey conducted by the KTO in 2019 found that the total
Hallyu-related tourist spend is USD 1.1 billion and that Hallyu-related tourism made up
55.3% of all inbound tourism. With the K-Culture Valley or “Hallyu-wood” theme park
already built and with further upcoming developments, this traffic is expected to
increase, which will in turn fuel the growth of the Korean wave.

Some of the spillover effects of Hallyu on tourism in Korea include:

Rise of the Korean superstars: The main components of the Korean Wave – movies,
music and the dramas – has given birth to a new generation of Korean celebrities who
have attained superstar status in the entire South East Asian countries including Japan,
China, Singapore, Hong Kong, Taiwan, and Vietnam. Bae Yong-joon (Yonsama), BoA,
and others have been drawing huge crowds where they go. A case in point is when the
Japanese Prime Minister Koizumi mentioned in a press conference that he wished that
he were as popular as Yonsama. This has given Koreans a great boost in their
confidence as their stars are being looked up to by millions of people in the region. On a
lighter note, this has also helped soften the tension during international discussion
between politicians as many politicians who visit South Korea have been insisting on
meeting these celebrities on a personal front.
Increased interest in Korean tourism: Hallyu has given Korean tourism a shot in the
arm and helped tremendously in repositioning the Korean country image globally. As
the movies, music bands and the dramas gained popularity, people from many
countries have been flocking into Korea to experience the Korean culture first hand.
KTO has been very active in offering package tours which includes a visit to the
shooting locations, the various towns and resorts made famous in the movies and
dramas and so on.

In 2019, Korea earned USD 21.5 billion from tourism, attracting a total of 17.5 million
tourists. With South Korea’s international tourist growth forecasted at an annualized rate
of 3.3% to hit around 1.8 billion by 2030, the Korean government is planning to increase
its tourism revenues to USD 35 billion a year by then. The side effect of this tourist
boom has been an increased popularity of Korean cuisine.

Improved Korean country image: Korean popular culture has had a significant impact
on the global fashion industry as an increasing number of Korean celebrities are
included in the social fiber of fashion.  New York has had its appearances of K-Pop girl
groups like Girls’ Generation, Hyuna from 4Minute and CL from 2NE1. The singer G-
Dragon dresses in an influential way that gets international notice as Korean celebrities
are known for mixing styles and genres in clothing. Korean popular culture products
including TV series such as My Love From The Star, music from PSY, boy bands like
EXO and girl bands like Girl’s Day, are putting Korea on the global scene.

Till very recently, South Korea evoked the images of the Korean War, the North-South
Korean conflict, the burgeoning chaebols, many of which suffered hugely during the
Asian financial crisis and the Seoul Olympics. All in all, nothing very positive and
glamorous. Brand Korea was pretty elusive to everyone outside of Korea.

All of that has started to change with the explosion of Hallyu. Hallyu has provided Korea
with an excellent opportunity to showcase its diverse culture, people, its unique
entertainment products, exotic locales and its own pan-Asian superstars to the rest of
the world and thereby create a very strong brand Korea. With the maddening popularity
of Korean movies and dramas, the focus seems to have shifted towards Korean values,
society, emotions and the beautiful locations projected in these movies. This in turn has
given Korea a good chance to create new perceptions and images of itself across the
world.

All these factors have had the unstinting support from the Korean government, all the
artists, businessmen as well as the Korean population. This collaborative effort has
propelled Hallyu into a sustained cultural phenomenon rather than just a mere fad.

Future challenges for Hallyu

Although Hallyu has sustained and grown for the last many years, carrying on into the
future will be very challenging. One of the main reasons for its popularity to explode
across the region has been its novelty and newness. After all, there are only a certain
number of emotions! Though the Korean government and all the others involved have
shown great maturity in handling this Korean wave, sustaining it over long periods of
time will truly be a challenge.

Some of the major challenges for the Korean Wave are discussed below:

Sustaining innovation in the cultural products: Innovation lies at the heart of the

success of many Korean movies, music bands and dramas. To continue to lure viewers
across South East Asia, Korean producers have to be innovative not only in the themes
and stories but also in the creative execution. This is easier said than done given the
enormity of the task at hand. South East Asian countries are all unique in themselves.
Though dramas like Winter Sonata was able to tap into the underlying common
emotions and become hugely successful, it is open to discussion as to how long can
Korean producers continue to do that. This will prove to be a major challenge as the
best-selling management book “Asian Brand Strategy” by Martin Roll has illustrated in
much detail.
Avoiding over-exposure of Korean stars: The main players in the success of Hallyu
have been the Korean stars like Yonsama, BoA and others. These celebrities have
emerged as regional superstars with major companies – local and international –
choosing them as their endorsers. The movies, dramas and the various commercials
are milking their popularity to a great extent. This may lead to an over-exposure of these
celebrities. As the success of upcoming movies and dramas depend on these stars to a
large extent, diluting their brand equity and image through over exposure would not be a
very good idea. At the same time, controlling this over-exposure will be a great
challenge for everyone involved from producers, companies to the celebrities
themselves, as each one of them will want to maximize the star power.

Sustained investment from the Korean government: The Korean government has

been actively participating and supporting the growth of Hallyu. With the Discover Korea
Your Way campaign by the KTO and other Hallyu-wood projects, the government will
need to invest heavily and increase their spending throughout the entire journey. In
addition, the government will need to work closely with the KTO and other authorities to
think of innovative and effective campaigns to boost Hallyu tourist spends. To sustain
investing over a long period of time and to see through projects thoroughly will indeed
be a daunting task.

Conclusion: Korea needs to tap on the massive potential of the Korean

Wave

All in all, there is no doubt that Hallyu has catapulted Korea on to the global stage. With
so much international attention on Korea and its pop culture scene and its creative
economy, it is imperative for the Korean government to leverage on all its entertainment
and cultural products to further drive the brand equity of Korea as a country.

Brand Korea needs to be able to strike a balance between not over-commercializing

Hallyu, but to market and build its identity in a genuine way. The growth of the Korean
Wave over the past 2 decades has been a fascinating one, and it is still unfolding.
Moving forward, it will be interesting to see how Korea continues to innovate and tap on
the massive potential and popularity of the Korean Wave to sustain its appeal to global
audiences. This could further enhance the nation brand equity of Korea, and contribute
to the continued success of the Korean society, economy and culture.

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About the author: Martin Roll – Business & Brand Strategist

Read more: AmorePacific – Korean Beauty Company Going Global