PSY’s “Gangnam Style” has attracted more than 1.5 billion YouTube views in 2012 and cultural aspects of South Korea were newly discovered by international audiences. However, the first Korean cultural wave was initiated far back than that.
“Hallyu”, which is a commonly used term meaning “Korean cultural wave”, was originated in mid-1999 by Beijing journalists who were surprised at the speed of the fast-growing popularity of Korean entertainment and culture. Hallyu includes K-pop, TV dramas, movies, and lifestyle with Korea’s high technology and also means the growing aspiration to know more about Korean culture worldwide.
Today, the popularity of Hallyu is everywhere and mainly led by TV dramas and K-pop. According to the Korea Creative Contents Agency, the export of Korean dramas is on a rising curve from USD 105 million in 2008 to USD 133 million in 2010. Korean dramas are especially popular among Asian countries and the popularity is expanding the realm to all over the world.
K-pop stars are also rising as representative cultural ambassadors of Korea. Korea’s music export showed remarkable 167.7% growth in 2010, 113.3% growth in 2011 (Deloitte, 2012). Korean music industry not only captured a large number of the Asian population but is also increasingly gaining western fans. When S.M. Entertainment, one of the Korea’s biggest music producers, held a concert in Paris in 2011, all 14,000 tickets for the two days’ performance were sold out and drew fans from all over Europe.
This worldwide Korean cultural popularity casts a huge business potential for Korean corporations. By analyzing the export data during 2001 till 2011, the Korea Export-Import Bank found out that a $100 increase in the export of Hallyu cultural products resulted in a $412 increase in that of consumer goods. In a survey from the Korean Chamber of Commerce & Industry (2012), 82.2% of participating Korean corporations responded that Hallyu enhanced the positive image of Korea and Korean products and almost half of them mentioned Hallyu actually increased the company sales. This sales increasing effect was especially strong in service industry including culture (86.7%), tourism (85.7%), retail (75%) and also obvious in manufacturing industry including food (45.2%), electronics (43.3%), cosmetics (35.5%), and automotive (28.1%).
Therefore today, Hallyu marketing is a widely used marketing tool among Korean companies. For instance, Daesang, a Korean food company, hired a popular K-pop girl group as its model for a health drink product in Japan and sales increased 35 times from 2010 to 2011. Lotte Chilsung Liquor also hired a popular Korean actor as a model for its rice wine product and sales increased twice more than the target sales of the year in Japan (2011).
Korean electronics companies are also active Hallyu marketers. LG Electronics has been sponsoring Hallyu concerts to enhance worldwide brand awareness and hired popular K-pop stars to globally target younger generations in promoting 3D TV and smartphones. LG Electronics recently started collaborating with JYP entertainment for further Hallyu marketing activities.
Cosmetics industry is not an exception. With active Hallyu marketing, AMOREPACIFIC, LG Household & Healthcare, MISSHA, three representative Korean cosmetics companies are excelling in overseas markets increasing the sales by 30% in 2012. For example, the brand “Beyond” of LG Household & Healthcare, hired a popular Korean actor for promotion in Hong Kong and the sales doubled in less than half a year.