China's increasing appetite for South Korean entertainment
China's economic
boom is creating new expensive tastes—but not in food.
In just four years, Chinese investors have flooded South
Korea's service
sector by 940 percent, from $100 million in 2010 to $940 million in 2014, based
on records from Korea's Ministry of Trade, Industry & Energy. This is
largely attributed to China's increasing commitment to Korean media and
entertainment, according to Keehyun Lee, head of the policy research division
at state-run Korea Creative Content Agency.
More specifically, investors from Asia's economic dragon are
using their financial clout in South Korea's entertainment industry so that
movies and TV shows increasingly cater to Chinese tastes. Although the
Chinese seem to be muscling into South Korean media, the cross-border
collaboration is proving there are mutual advantages for both countries.
"The inflow of Chinese investments into the Korean
entertainment industry [has] synergistic effects," Lee said. "There
are now opportunities for both Chinese and Korean entertainment industries to
grow together by co-planning, co-investing, co-distributing, and co-developing
marketing strategies."
The most popular form of investment has been to acquire major
company stakes. Alibaba announced last
August it would invest 100 billion won in Korean films. Separately, Chinese
media and contents company Huace pledged $50 million in October to become the
second largest stakeholder of Korean movie studio NEW.
Elsewhere, China's Juna International just bought 3.4 million
shares of Chorokbaem Media, Korea's largest drama production company.
China's taste for the dramatic
Although Korean companies can use the capital to boost
production budgets and quality, Chinese companies stand to benefit from
"the superiority of Korean entertainment" production that has managed
to garner so much global demand, Lee said.
The influx of capital is driven by high demand for Korean
content in major cities like Beijing and Shanghai, according to Lee. For
instance, the 2013 Korean smash hit online drama "My Love from Another
Star"sparked a cult craze in China and
amassed a whopping record viewership of nearly 3 billion—more than double
China's population of 1.3 billion.
The high demand is inflating costs for distribution rights,
increasing this revenue stream, according to Chris Jung, chief operating
officer of Showbox Mediaplex, one of the largest film distribution companies in
South Korea.
Until last year, cost for distribution rights of Korean dramas
was roughly $10,000 per episode, but it has soared to $100,000 to $200,000 per
episode this year on the back of surging popularity, Jung said.
Mike Suh, vice president and head of international business at
Korean CJ E&M, agreed with Jung, saying that according to CJ's partners in
China, the prices of Korean dramas increased six to 10 times over the past
year.
"It seems the prices of Korean drama have increased due to
intensified competition among online video sites in China," Suh said.
"To attract traffic on their sites, they are competitively seeking
well-made Korean content which share similar cultural background and feature
popular Korean stars in China."
Is this a Korean or Chinese movie?
More aggressive Chinese players choose to partner with Korean
companies to co-produce content, rather than to buy company stakes outright.
Showbox's production of the 2012 movie "Mr. Go"
involved a 25 percent investment from Chinese film production company Huayi
Brothers, Jung said. Showbox accepted the partnership "not because we
needed the money but because we wanted to make this film as a Korea-China
co-production, so that this movie can be released in both markets," and to
learn how to become a global player, he said.
A Chinese star was cast for one of the leading roles in
"Mr. Go" but Jung does not believe Chinese investments dilute the
representation of Korean culture and identity in movies and dramas. Targeting
multiple audiences allows the movie to "be a Korean movie for Korean
audience, but at the same time, Chinese movie for Chinese audience," he
said.
Before China's interest in South Korean entertainment, Japanese
actors or actresses were heavily recruited and cast as a strategy to attract a
Japanese audience, Suh said. Increasingly, use of Chinese or Korean stars who
are popular in China helps advance the same strategy: growing a global fan
base.
The ties that bind
The free trade agreement signed in early November by China's
President Xi Jinping and his Korean counterpart, Park Geun-Hye is expected to
increase the speed of Chinese investment in Korean media even more. The trade
deal clarifies film production and copyright terms that will help remove
investment barriers.
A film
co-production deal was also signed by the two countries in
September that will allow Korean films funded by Chinese investors to be
acknowledged as China-produced films, Lee added. "This would increase the
speed of partnerships between Korean companies with film production skills and
Chinese companies with abundant investment budgets," he said.
This pact will allow Korean companies to avoid China's import
quota limits.
Some Korean companies are prompting alliances with new media
types. CJ is working on projects with Chinese digital media streaming services
such as iQiyi and Youku that could stream CJ's entertainment content online—the
most popular platform that Chinese viewers use to access Korean content.
Pasted
from <http:www.cnbc.com