Halluy: How South Korea became the Coolest Country in the World

South Korea feels like a cultural sleeper cell that burst onto the scene ready to take everything from everyone. How did they go from obscurity to the biggest influence in global pop culture?

Image: kpopmap.com

A USD $5 billion music industry, USD $5.3 billion dollar luxury fashion industry, USD $1.6 billion local box office and USD $41.6 million export value for film. From one of the poorest countries in the world, to one of the wealthiest and most culturally relevant, South Korea has emerged as a country synonymous with cool. The Korean Wave, locally known by the Chinese word, Halluy, has spread Korean creative and cultural products around the world.

To the untrained eye, this growth might appear coincidentally, or a lucky surprise. It wasn’t. Halluy is a government experiment in mobilizing the creative and cultural industries for soft power and economic growth. It is an experiment that has done exceedingly well.

At a time when government agencies were more focused on traditional forms of foreign policy like ambassadors, Presidential visits, and diplomatic missions, South Korea took stock of the changing times and decided to get ahead of everyone else. After painstakingly building a manufacturing-based economy that ultimately crashed, the government was uninterested in building an economy that could not stand the test of time. 

South Korea saw an opportunity in a sector that is often ignored or an after thought. But by leveraging technology, as well as a young and eager population, South Korea spent the better part of 30 years turning everything around-their economy, their culture, and their global image.

By studying various markets and target audiences, the country deployed an inclusive pop culture strategy which embraced more people than it excluded. The small country with a population of 51.4 million people somehow anticipated the inter-connectedness of the global economy. Now, years later, Korean cultural content has infiltrated the markets on every continent and gained a global audience. In the process, they would change the way the world saw them, developing music, film and numerous creative and cultural products that would define entire industries. 

Image:economist.com

A Country in Transition 

How does a country go from one of the poorest nations in the world, to rapid industrialization, elevating them to the top of the manufacturing food chain, while also pulling ahead as the coolest country in the world? 

The Korean War ended in 1953 leaving the newly formed South Korea poor. Up until the 1970s, the country had less wealth than North Korea. The first real economic lift in South Korea occurred thanks to the positive government and private sector relationship in the country. In the 1970s the government decided it would focus on manufactured exports and the private sector complied leading to the growth of companies like Samsung, Hyundai, LG. These companies would give rise to diversified conglomerates called Korean chaebols, which operated in every sector of the economy from chip to ship making. These companies would later fail during the Asian financial crisis from 1997-1998,  creating a lot of uncertainty for foreign investors.

In addition to the government-private sector relationship, South Korean lifted the ban on foreign travel in the early 1990s which allowed a number of South Koreans to travel abroad to school and work in a number of regions like North American and  Europe. Those individuals would then return to South Korea with the benefit of that exposure and ultimately leave their mark on the local economy and culture. 

Just before the financial crisis would force the government to re-evaluate the direction of the economy and their focus, South Korea would roll back a number of censorship laws that had been in place for decades. This empowered young artists to create boldly without fear, testing and experimenting in all genres and disciplines. Hand in hand with lifting censorship laws was a decision to build the world’s fastest internet, a specific goal of the South Korean government for over a decade. 

Enter the Asian financial crisis of the late 1990s. With their economy in disarray, the Korean chaebols were now forced to streamline their businesses to their core competencies. This opened the market up for hungry entrepreneurs looking to fill the void that those business left following their decline. The business world was so deeply shaken that then-President Kim Dae-Jung realized how dependent the country was on the success of these conglomerates. In an effort to bring South Korea back from the brink, the country did two things: the Korean government took out a loan of USD 97 billion from IMF (International Monetary Fund), spent only USD 19.5 billion and paid it back in record time.

With the country now stable, President Kim-Dae-Jung identified technology and pop culture as the industries the government would invest in. Much like the 1970s, the private sector got to work.

Image: somagnews.com

Building the Coolest Economy in the world

With the decision to pivot its efforts to pop culture, the government had to have a plan. Given the significant investment needed to develop a competitive advantage in most industries, the government realized there were really only two things that they would need to become the leading exporter of popular culture: fast internet and talent. 

Given the unique relationships private entities and the government already had, it was not difficult to get companies on board. The government already knew how to incentivize the private sector, so the country was off to the races. South Korea realized their goal of possessing the fastest internet on earth in 10 years by implementing protocols to encourage demand and support supply. The government was proactive, encouraging citizens to buy computers and subsidized internet for low-income and traditionally unconnected people. When CNN wrote a piece in 2010, on the lightning speed of connection, they noted that 94 percent of South Koreans were connected to high speed broadband. Not only did the government do everything in their power to drive the demand for high speed, high quality internet, they also invested the time to craft policies and legislation that would allow companies to meet that demand with supply. In fact, in 2010, it was believed that South Korea was about 4-5 years ahead of the US in broadband policy as a result. Just imagine how far ahead their policies are now, decades later?

The next step was to focus the government’s energies on an element most would assume is beyond influence, the talent. Depending on who you speak to, the assumption is often that talent is God-given, or happenstance. It certainly is not commonly held that strategy, development, or investment can increase or build an economy around talent. You either have it or you don’t. Well, that’s why you are not South Korea.

The Ministry of Culture in South Korea is unlike any other in the world. Given the dogged focus the country had on building an economy based on their pop culture, the government created a ministry that harnessed their energies into growing specific industries. Further flying in the face of commonly held assumptions about developing industries one at a time, the government decided to invest in all pop culture industries at once:  music, movies, makeup, food, and fashion. 

To achieve this all-or-nothing approach to industry development, the Cultural Content Office (CCO) within the Ministry of Culture in South Korea commanded a whopping USD $500 million aimed at building a 10 billion dollar industry by 2019. Since BTS, one of the biggest boy bands in the world, is worth $3.4 billion dollars on their own, and the k-beauty industry was worth $13.1 billion dollars as of 2018, it looks like they were shooting low. 

In addition to the CCO’s annual budget, the Korean government sponsors 20-30% of a USD 1 billion investment fund earmarked to nurture and export popular culture. So South Korea’s objective is not only about setting aside the funds to drive cultural and creative industries locally, they also have established strategies to push all that content out into the world. As of 2016, 28 Korean Cultural Centers are present in 24 countries in Africa, Asia-Pacific, Europe and the Americas dedicated to promoting Hallyue. 

From the 1990s to 2020s, South Korea has spent the better part of two decades methodically studying the global market, building the foundation and infrastructure to nurture local talent, and laying the framework for cultural exportation around the world. Now, we have about a decade’s worth of data to show just how those investments paid off not only in soft power, but also the emergence of Korean culture into the global consciousness. In 2019, Parasite became the first foreign-language film to win Best Picture at the Academy Awards. BTS is the first group since the Beatles to chart 4 albums on the Billboard in such a short time, a year and nine months. In the skincare market Korean products are the global S.I Unit, rapidly gaining on long-standing French and Japanese products. 

Image: 10mag.com

A Pop-Culture Ecosystem

The most fascinating facet of South Korea’s development of the creative and cultural industries is the impact the industries have had on each other. A symbiotic system has developed. Growth and success in one industry necessarily builds on and pushes progress in other industries. The skincare industry enjoys a boost from musicians and actors whose beautiful skin is envied by the masses. It is only fair that the stars share their skincare regimes, which, predictably are South Korean products. This is the same way that k-pop stars share their favorite sheet masks, or what Korean fashion designers they are wearing. Beyond personality based endorsements, South Korea has experienced a growth in tourism. In 2000 South Korea saw 5.3 million visitors compared to 15.3 million visitors in 2018. 

The more tourists make their way to South Korea’s shores, the more exposure there is to South Korean culture. There, visitors can experience the growth of modern art, classical music, musical theater, as well as modern dance and ballet. Among the list of creative successes are that five young Korean artists won five prizes in the disciplines of piano, solo vocal and violin at the International Tchaikovsky Competition held in 2011, one of the top three international music competitions in the world. From the launch of the National Dance Company of Korea in 1962, ballet has had an illustrious trajectory in South Korea. More recently, Park Seon-mee, a student at the Korea National University of Arts, became the first Korean to win the Moscow International Ballet Competition, one of the three major ballet competitions in the world, in June 2017.

At this stage in the growth of Halluy, it is clear that creative and cultural industries not only grow independently, or even directly adjacent industries like music, film and beauty, they expand. We see a broadening of the ecosystem. The development and growth of the creative and cultural industries leads to further growth in non-adjacent industries thanks to the government’s industry agnostic investment approach. 

At no point did South Korea set out to grow their music ecosystem, or film industry. The goal was to focus on all pop culture industries with export potential. By examining the inputs that would cut across the most industries, namely distribution and finance, they were able to accelerate the growth of countless industries. In the same way that adjacent creative industries are growing, so too, will various technological offshoots. 

To stay on top of popular culture, South Korea knows that technology enables greater penetration, high quality user experience and a wider reach. This will be crucial in keeping them ahead of their competition. Fast-paced research and development is encouraged and, yes, you guessed it, government supported, allowing South Korean companies to stay one step ahead of their foreign competitors. Therefore, skincare products are carefully designed, maximizing for feel, touch smell, and of course results. In the area of music, tech is tackling the inefficiencies of touring- which is a major money maker for artists. Allegedly, the country is working on realistic holograms to allow concerts to take place in many locations. This would allow artists to maximize their touring budgets, reach more fans, and cut down on the impact touring has on their ability to create new music.  We are talking about a whole new world. 

Image: translatemedia.com

Lessons from the Kings and Queens of Cool

At the end of the day, magic can happen when the government steps into, and is intentionally engaged in, the development of an industry or ecosystem. That magic is accelerated when the government is focusing their energies on the right things. South Korean id just that by disabled the handicaps that would stifle the growth of a robust pop culture driven economy. By investing almost a decade into building, developing and nurturing an open, competitive, and efficient internet culture, they were then free to invest in creative spaces to grow talent. 

While there is no formula for building an industry so tied to shifting tastes and appetites, there is a formula to creating an enabling environment. Of all the countries I have learned about in the East, South Korea above all understood the delicate balance between infrastructure, funding and independent creativity. By involving government in the areas that required stability, regulation and funding, and leaving creatives to handle the actual creation, South Korea emerged 20 years later to a creative and cultural economy that rivals many others. 

For nations that thumb their nose at the creative and cultural industries, South Korea’s strategy is an example of dual impact. With a small population and limited investment in physical infrastructure, the country built formidable soft power while growing the nation’s GDP.

Time will tell whether the South Korean model has staying power. However, given the investment that is also going into creative, cultural and technological innovations, South Korea is planning to stay at the top of this market. Unless another country shows up as deeply invested in exporting their culture and willing to put money behind that agenda, South Korea may hold the top spot for some time to come. 

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The Content Biz Bailout

1. Read more about the rise of Hallyu here. From government interventions, to unique business structures that reduce innovation friction and the meaningful participation of foreign educated South Koreans, a lot went into the development of the Korean Wave. 

2. Check out the most recent k-drama crazes Crash Landing into You and Descendants of the Sun. Don’t blame me if you get addicted!

3. If you’re looking for a list of South Korean films to check out, look no further. Here is a list curated by Culture Trip. 

4. If you’re more interested in the evolution of the K-pop scene take a look at Rolling Stone and Vox’s take on the phenomenon. 

5. If you are interested in K-beauty brands to keep an eye on, Harper’s Bazaar recently released a list you can take a look at.

6. Finally, if you are interested in the impact South Korea is having on the fashion world take a look at these pieces by Not Just a Label and Vogue UK. More pieces will certainly emerge as designers move from regional success to global appeal.

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