The Korean Wave and the Expansion of Korean Consumer Goods Worldwide

By Joseph Lee

Many goods in South Korea have experienced a spike in profits with the rise of K-pop and K-dramas worldwide. The love of K-pop and Kdramas have significantly impacted the success of Korean industries in the global market including beauty, food, and electronics. Social media plays an important role, particularly YouTube with over 50 million K-pop videos online, making Korean content accessible globally for people to enjoy. With translation assistance from the online community, these shows are not only entertaining but act as cultural agents, raising awareness about South Korea on a global stage. This paper aims to analyze the globalization of Korean products as a direct result of the first and second Korean Wave, boosting the nation’s economy and public image. Several journal articles were compiled for this literature review from the Electronic ​ Commerce Research and Applications, International Relations, Emerging Markets, Finance, and ​ ​ ​ ​ Trade, Region: Regional Studies of Russia, Eastern Europe, and Central Asia, and more. News ​ ​ ​ articles were used from The Korea Times, the Post-Gazette, and other notable blogs. This study ​ ​ ​ ​ has merit due to the changing economy in a global market. South Korea presents an exemplary case of how culture can impact businesses and thus, positively affect the country’s economy at large.

Introduction

The love of K-pop and Kdramas have significantly impacted the success of many Korean industries in the global market. Many businesses in South Korea have benefitted from the rise of

K-pop and K-dramas worldwide as international customers grow curious about Korean skin care, makeup, electronics, and cuisines. In particular, social media plays an important role, particularly

YouTube, as Korean music videos and dramas are easily viewable by people worldwide. Today, the Korean Wave has traveled far and wide outside of Asia, even reaching Latin America,

Europe, and North America. With translation assistance from the online community, global fans can now participate in K-pop fandoms and celebrity fan clubs as Korean entertainment continue to act as cultural agents, raising awareness about South Korea on a global stage. In an age of rapid globalization, this paper aims to analyze the growing popularity of Korean products as a direct result of the first and second Korean Wave.

Background

“Hallyu” in Chinese means the Korean Wave, a term used to describe the rising popularity of Korean dramas in China during the 1990s. During that time, the Korean economy suffered an economic crash in 1998 which damaged the country’s image and forced a decline of export goods made in Korea. Nevertheless, throughout the 1990s, Korean TV dramas and K-pop began to gain rapid popularity as many youths in Asia a started a movement to shine light on the pop culture phenomenon. Hallyu was then initiated by the government to uplift economic conditions and allow the image of the country to be rebuilt so that Korea could gain better trust from international consumers (Kim 156). In 1993, the South Korean leaders realized the immense economic power of music and films; for instance, the annual revenue of all Hyundai

cars was equivalent to the ticket sales of Jurassic Park. This single movie was able to beat South ​ ​ Korea’s car giant, Hyundai, and since then the Korean government focus its attention to cultural industries as a key economic initiative (Chen 28). The government anticipated that with improved efforts, Korean entertainment could promote trade in South Korea by relaying the appealing cultural aspects of the country. Since then, Korean dramas have spread across Asia which has further expanded worldwide in the 2000s (Kim 154).

After the initial spark of Korean dramas in China, the Hallyu Wave extended to K-pop ​ ​ music as well. Driven by social media and the rapid development of mobile phones, the K-pop craze spread throughout the world. By observing the Korean people’s lifestyle and traditions in music videos, variety shows, movies, and dramas, global audiences began to see the appeal of

Korean goods. In effect, people around the world began to have a growing interest in Korean barbeque, the Korean language, and even Korean traditional clothes (Kim 157). This eventually led the Korean Ministry of Culture and Sports to make immense efforts to promote Korean cultural products in the Western market. According to Professor Kim from Andong National

University (2015), this effort could lead to the next phase of the Korean Wave, which he calls

“K-style”, an era in which hallyu stars have enough clout to protect their publicity rights. For ​ ​ instance, in the case of My Love from the Stars, which gained incredible popularity in China, ​ ​ Korean copyright holders did not have the power to withhold publicity rights from related product sales such as dramas spin-offs and/or memorabilias (Kim 158). It is predicted that in due time, Hallyu stars will be able to better manage their publicity rights.

Hallyu Content and Export Data

To understand the impact of the Korean Wave on consumer goods, we must take a close look at the export data. Between 2010 and 2015, Korea’s total amount of exports grew about

2.05% per year, with 56.7% of exports to Asia (Huh and Wu 1389). Korean cosmetics exports increased to 23.5% per year, of which 83.5% went to Asia. Broadcasting content rose 15.1%, of which 92.7% was in Asia (Huh and Wu 1389). The Department of International Trade at

Chungnam National University used survey data from official trade databases to find precise information about how much broadcasting content was exported to Asia. This piece of data is significant because the comparison data from previous years can reveal new insights regarding

Korean exports. In understanding the relationship between culture and international commercial exchange, South Korea can improve their products to appeal to global audiences.

To do this, Huh and Wu (2017) examined Korea’s top 40 trading partners with their goods categorized as Nondurable (foodstuffs), Semidurable (clothing, footwear, and home ​ ​ ​ ​ furnishing items), and Durable (home electronics and vehicles) goods. In 2014, it was found that ​ ​ Japan had the most number of nondurable goods at 29% while China had 14% and the United

States 10%. Durable goods were mostly found in the United States at 28% while China was at

7%. Finally, semidurable goods was exported to China at 20%, Japan at 13%, and the United

States at 11% (Huh and Wu 1395). Overall, the results showed that Hallyu broadcasting exports had a positive impact on the export on all Korean consumer goods. However, the study revealed some bias in the regional distribution of exports, with most of the exports going to East Asia.

Interestingly enough, however, an above average number of exports were sent to North America even though East Asia was exposed to hallyu content in higher amounts. Therefore, it may be ​ ​

worthwhile for Korean companies to boost their exports to East Asia, where consumers are more familiar with all things “Korean”.

Regarding cosmetic brands, one study examined to what degree the Hallyu Wave impacted Chinese consumers’ opinions about Korean cosmetic brands. Kim et al. surveyed

Chinese tourists in South Korea regarding the effects of brand trust on consumer loyalty. It was hypothesized that once a consumer’s trust is gained, the consumer will continue to have confidence in their products and will repurchase from the same brand again. To test this, Kim et al. analyzed a sample data of 225 Chinese tourists visiting South Korea who answered a questionnaire about Korean cosmetic brand preferences (Lee et al. 116). The questionnaire had

28 items using the seven-Likert scale with 6 constructs, the researchers included Korean drama,

K-pop, brand trust, brand affect, purchase loyalty, and attitudinal loyalty in the study (Lee et al.

117).

The results showed that the loyalty of consumers were mostly indirect. For example, a tourist choosing Korea as his or her travel destination is most likely to be influenced by mass media. Similarly, the intention to purchase a Korean brand is most likely influenced by the brand’s image and quality of the product, in which the Korean Wave was discovered to be a precursor to establishing a company’s brand equity, a critical factor that indicates a relationship between the Korean Wave, the product, and the loyalty of consumers towards the product brand

(Lee et al. 118). It is recommended that cosmetic companies focus on brand equity and develop a strategy that utilizes Hallyu to promote their brand. The emotional attachment to a brand should be highlighted as it aids in maintaining purchase loyalty of consumers to repurchase from the brand again.

Though a much smaller demographic when compared to China, Jeong et al. (2017) examined the impact of the historical drama, Dae Jang Geum, on the adoption of Korean pop ​ ​ culture in Indonesia. In 2006, 12 Indonesian fans out a total of 41 self-identified viewers of the

K-drama Dae Jang Geum (Jewel in the Palace) were interviewed regarding the impact of the ​ ​ drama. The chosen participants were well educated, urban, middle classed female consumers divided into two group between the ages of 24 to 29 and a middle aged group between the ages of 45 to 54 (Jeong et al. 2292) In 2013, a follow-up interview was administered to compare the ​ ​ initial results after 7 years. The participants were not part of any Hallyu fandoms but were ordinary consumers interested in Korean cultural products.

The study revealed that the participants consistently consumed Korean products after exposure to Dae Jang Geum. The use of smartphones made a great impact, particularly among ​ ​ the younger generation while the older generation preferred to watch Korean entertainment through television. The historical drama peaked Indonesians interests in costume, medicine, food, and Korean traditional practices while other, more modern dramas were simply considered

“trendy” (Jeong et al. 2293). After 2010, the Hallyu phenomenon had began to dominate

Indonesia as Kpop and Kdramas experienced what many called the New Korean Wave. The rise of social media made a great impact on this, especially in K-pop music as online, fandom-driven promotion of goods were commonly used. In 2006, only 28 percent of Indonesians used a mobile phone. In 2013, the figure grew to 125.36% as Indonesia was crowned the fourth largest user of

Facebook that year (Jeong et al. 2295). Also, dramas such as You Who Came From the Stars, ​ ​ increased the Korean practice of eating fried chicken with beer (Jeong et al. 2294). Restaurants such as BibiGo and School Food opened in Jakarta and other large cities in Asia. Also, tourism

to South Korea rose from 2.4 million in 2005 to 9 million tourists in 2012 and the number continues to increase (Jeong et al. 2294).

Regarding Korean food, the National Restaurants Association reported that Korean cuisine placed 7th among trendy international cuisines in 2011 (Lee et al. 200). In a study performed by Lee et al. (2015), the researchers analyzed the impact of Korean celebrities on the expansion of Korean restaurants. The country of origin (COO), also known as a country’s image, refers to what a person believes about a particular countries’ image. The ‘COO effect’ alludes to the idea that people have a specific opinion about a country based on political, social, and economic information about a country. This, in turn, affects how they consume the COO’s products. The Hallyu Wave has shown the tremendous impact of Korean celebrities. With 182 fan clubs dedicated to Korean stars totalling over 3 million members, the statistics from the offices of Korean Overseas information have been founding to be significant.

To understand how Korean celebrities affect the expansion of Korean food, Lee et al. administered a survey in 4 different countries: Hong Kong, Bangkok, Sydney, and Dubai. These

4 cities were selected because Korean restaurants have not been fully established in these regions unlike Los Angeles, Beijing, or New York. Thus, the study itself can help to cultivate the expansion of Korean restaurants in these cities. The survey consisted of five parts that measured for the following in consumers: preference for Korean restaurants, perceptions of the image of

Korea, the likability of Korean celebrities and Kdramas, and the demographics of the participants

(Lee et al. 204). The results revealed that the likability of Korean celebrities affected the country’s image positively. Surprisingly, the likability of Korean music did not impact the country’s image. One theory might be that songs are short which a focus on sounds, such as

lyrics instead of visuals. Korean dramas, on the other hand, allow celebrities to build rapport and emotional ties with fans through its visual storytelling. In short, it is recommended that the

Korean government, including food industries, evaluate the image of Korea in such countries.

Incorporating favorable images of a variety of Korean dishes in Kdramas could aid in displaying the superiority of Korean food.

How Social Media Impacts Product Recommendations

The increase in exports would not have been possible without the impact of social media, which has allowed consumers to diversify their selection of movies, music, food, and fashion. In

China, WeChat and Weibo plays a significant role while in the United States, Facebook, Twitter, and Instagram have become popular content providers (Zhang and Yoon 130). In essence, social media’s ability to facilitate communications across borders has helped to promote customer relationships beyond language barriers. By examining the immense traffic and flow of information on social media, consumers’ level of involvement and social media-based arguments may reveal important insights regarding the dissemination of cultural products. Through a critical understanding of today’s cross-border cultural phenomenon, Korean companies may be able to gain greater insight into the social, economic, and cultural impact of social media on the purchase decisions of consumers.

In one study performed by Zhang and Yoon (2018), they examined whether or not

Chinese consumers would share Korean cultural products with other people. One way to determine this is by examining a consumer’s involvement with a specific product and how it impacts ‘argument adoption’ regarding the product. For instance, the recommendation for an experience-based product, such as a movie, is done by word-of-mouth while the recommendation

of a tech product is based on objective, factual arguments made online (Zhang and Yoon 131).

More than this, however, Zhang and Yoon noted the importance of network centrality and tie strength which seem to be crucial factors for product recommendations. The study found that network centrality, which is defined as “something (or someone) that is most central in the network context of social media”, influences argument adoption far more than tie strength, meaning an individual’s “tie” to their counterparts in social media (Zhang and Yoon 132).

Practically speaking, this would mean that a Chinese consumer whose central network position would make them a gatekeeper, introducing new products and key information regarding Korean cultural products (Zhang and Yoon 136). Surprisingly, tie strength did not have a significant impact on argument adoption, possibly due to bias as people who have stronger connections to one another may not make objective observations but become swayed by the ‘tie’ they have to the recommender.

Overall, the finding supports that the arguments made on social media sites greatly impact the purchase decisions of consumers in China. Previous literature also purports that the greater the involvement of consumers, the more likely they will buy a product which is consistent with other similar studies. This involvement is possible due to the communicative nature of social media sites. Therefore, high involvement products such as K-pop music produces a stronger adoption of arguments than Korean fashion, which is considered a low involvement product. This study, being limited to Chinese consumers, does not represent other countries and thus, further studies that expand across cultures would reveal a broader data for analysis.

To understand the influence of social media outside of Asia, we examine the role of social media on the Hallyu Wave in Latin American. To be specific, in Chile, Argentina, ​ ​ ​ ​ Mexico, and Peru, the diffusion of the K-Pop was mostly influenced by female teenage fans. In one study performed by Meza and Park (2014), hashtags (ie. Kpop and Kdramas) are used to create a model to analyze the structural and informational communication patterns on social media sites such as Twitter (Meza and Park 1347). The study measured which major hubs were the most active in distributing K-pop content and how the material was shared with the public.

The researchers decided to use Twitter because it is the most utilized social media platform with over 340 million tweets and 1.6 billion search queries daily (Meza and Park 1350). Messages related to K-Pop were closely examined in order to trace communication patterns on the website using Twitter’s geolocation feature where the message was posted.

The results showed a pattern of users sending large tweets over a short period of time, retweeting and sending the same topics regarding K-pop. Public broadcasts have featured K-pop music as Latin American fans continue to rise in numbers. Only 0.1% of the comments mentioned a sole interest in K-pop due to the attractive of appearance of Kpop artists (Meza and

Park 1355). This data shows that appearance of the members are not an important factor in these countries. Rather, Latin Americans gravitate towards exotic and upbeat sounds, which is why

K-pop music may be so appealing to them. Also, tweets being sent while they are listening to

Kpop music or watching korean TV programs had an increased level of engagement and were more susceptible to trending social influences.

Even in Turkey, YouTube made Korean dramas available to the public beyond what were ​ considered “fill-in” programs. With over 50 million K-pop videos on YouTube as of 2011, the

rise of Korean pop culture had begun after various K-pop forums had popped up on the internet, one of them having around 41,000 members (Oh and Chae 90). Before the use of YouTube, ​ access to Korean dramas and K-pop allowed the people of Turkey to view other content outside ​ of Turkish TV channels. Initially, the first Korean Dramas broadcasted on Turkish TV were ​ “Emperor of the Sea” and “All in”, which had a very disappointing low viewer rate (Oh and ​ Chae 86). They were considered fill-in shows for the main TV programs. Nevertheless, the initial ​ launch of Korean dramas in Turkey, laid the basic foundation for the Korean Wave to flourish in

Turkey. The first few viewers searched for everything related to South Korea and its culture on the Internet and in January 2007, their interests regarding Korea had led them to establish

Turkey’s biggest internet community about Korean pop-culture called Korea-Fans.

In turn, the influence of K-pop and K-dramas have positively affected the demand for

Korean goods. Korean restaurants began to see a rise in the country, which only seemed to attract short-term Korean tourists before. Today, more and more Turkish customers visit Korean restaurants to explore Korean food. In addition to food, many Turkish people became interested in learning the Korean language. Kdramas became tools for language acquisition and learning, particularly through the accessibility of dramas on YouTube, which only provided subtitled rather than voiceovers. The interest in Korean culture grew so much that many university students in Ankara University demand entrance into the Korean Studies department (Oh and

Chae 91).

K-Beauty Driving Exports

The Korea International Trade Association (KITA) revealed that Korean exports totaled

$6.7 billion in the first half of 2016. A 15.2 percent increase, Korean products will continue to

rise in demand in the coming years. In particular, Korean cosmetics increased in export from

31,606 tons in 2011 to 90,491 tons in 2015 (Linaja). Profits increased threefold from $698 million to $2.45 billion in sales. In 2014, Kim Soo Hyun from the Kdrama, My Love From the ​ Star, became the face of a cosmetic brand called Beyond, an LG Household & Health Care ​ company (Tyrimou). Many international brands such as Christian Dior, Chanel, and Goyard were advertised on the show as well. The Korean cosmetic brand, Sulwhasoo, experienced a surge in sales after product placement in Korean dramas. In Indonesia, Korean children’s wear also rose in popularity as it is considered more fashionable and affordable than other competitive international brands (Tyrimou). AmorePacific has paved the way for Korean beauty products in the United States, with their products now sold at Sephora, Target, and Bloomingdales. While the diffusion of all things Korean is still in its infancy stage, new retailers such as Soko Glam and Peach & Lily have been educating the American public about K-beauty (Tyrimou). In 2016,

Korean cosmetics products made $225 million in sales and with K-beauty products hitting 2100

CVS stores nationwide as this trend is expected to increase each year.

The Korea Trade Investment Promotion Agency (KOTRA) reported that the sales of beauty products have also increased in Latin America. Sales in Brazil, Columbia, Chile, and other Latin countries had a combined sales record of $8.35 million in 2017 (Lee). KOTRA officials attribute the Korean Wave to an increased interest in Korean beauty products. Facial creams, whitening masks, and makeup are also gaining interest from male customers, Brazil being the second highest cosmetics market for men in the world and Mexico being eighth largest

(Lee). International brands such as L’Orreal, Garnier, and Lancome, have been experimenting with Korean beauty products by offering their own BB creams and cushion compacts. Europe,

particularly Western Europe, remains untapped but it on the verge of being hit by the Korean

Wave as K-pop and K-dramas grow in popularity.

Conclusion

The New Korean Wave and the diffusion of K-pop worldwide has taken Korean exports to a new level. With the growing trend of Korean beauty products, makeup, and food, more and more Korean products may enter the global scene in the near future. Considered affordable yet of good quality, the demand is will only increase. It is recommended that Korean companies continue to utilize Korean entertainment, such as product placements and commercials with

Korean celebrities to market their products. Product specific research is needed to gain a better understanding of how the Korean Wave affects each industry. The South Korean government’s strategy to focus its attention on Korean entertainment has proven to be effective as Kdramas and

K-pop continues to spread even in countries where Korean content was not received with open arms, such as the United States. However, with the likes of the popular Korean boy band, BTS, appearing in American TV shows and Korean dramas and films offered on Netflix and Hulu, it is only a matter of time before the third Korean Wave reaches mainstream markets.

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