Cashing in on K-drama

Although South Korea has been rolling out stimulus measures in recent months to boost sluggish exports and tourism, not many have had as immediate and strong an impact as K-drama. 

The sweeping popularity of the television drama “Descendants of the Sun” has become “an unexpected blue chip” for South Korea’s slowing economy. 

Market observers say that the 16-episode series will generate more than 3 trillion won (Bt91.7 billion) worth of economic effects for the nation that heavily relies on exports.

The figure is not big enough to have a drastic impact on the world’s 11th largest economy with a gross domestic product of $1.43 trillion. But it is still significant that a mere 13-billion-won production can generate this much effects, say market observers. 

The rough estimate of 3 trillion won is based on the amount believed to have been generated by another hit drama series “My Love from Another Star” in 2014.

Some Korean economists believe that consumers, particularly in certain parts of Asia, desire to buy South Korean products after seeing K-dramas. 

Growing demand for South Korean products fuels the nation’s exports and eventually stimulates the growth of manufacturing industry, according the Hyundai Economic Research Institute.

 “Descendants of the Sun” is expected to have much more far-reaching power than previous hit shows, the analysts said. Its 10th episode, aired last Thursday, reached new records in viewership of 36.4 per cent in Seoul and 31.6 per cent nationwide. 

In China, the show has been viewed more than 440 million times cumulatively through the video-streaming portal iQiyi. The Chinese government has even issued warnings about the dangers of South Korean dramas. Watching too much could lead to legal troubles, Chinese authorities said in a statement posted on Weibo, the Chinese Twitter.

Set in a fictional war-torn country, “Descendants of the Sun” tells the love story between a solider and a surgeon, played by actor Song Joong-ki and actress Song Hye-kyo, respectively. It is a departure from the traditional plot of hallyu (Korean Wave) dramas as it weaves in a humanitarian tale with romance. 

The reason why industry watchers, officials – and even President Park Geun-hye – are excited about the drama is that it is expected to again boost the Korean Wave. Hallyu is a vital source that has boosted South Korea’s income through merchandise, film and television distribution, exports and tourism. But some raised concerns that the Korean Wave may be losing its steam.

They are taking notice of the potential economic impact of “Descendants of the Sun” as it also exposes a wide range of South Korean products, including major export items such as Samsung phones, Hyundai cars and cosmetics by Amore Pacific. 

The drama also subtly features South Korea’s rising industries, such as health care and sustainable energy by using a movable medical facility – known as medical cube in the drama – and a solar power plant. 

Companies are cashing in on the popularity of the drama, which has helped raise their brand recognition rapidly. 

Hyundai, Korea’s largest automaker, expects the drama to generate 110 billion won worth of advertising effects and also to help the company raise its market profile in China. It is one of the South Korean manufacturers that invested in the drama in exchange for exposure of their products. 

 “We signed a product placement contract with the drama producers as part of our marketing strategy to improve Hyundai’s market profile in China as the drama had hallyu stars Song Hye-kyo and Song Joong-ki as leading actors, and was to be exported to China,” says Baek Byung-uk, a manager at Hyundai Motor.

The automaker, which ranks fourth in China with around 10 per cent of market share, has been seeking ways to expand its market presence as well as its reputation. 

 “We export a lot to China, but we need to lift our reputation in the market to compete with other foreign carmakers like Audi and BMW,” he said. 

Sales of the Hyundai Tucson, a sport utility vehicle that actor Song Joong-ki uses in the series, has already risen 10 per cent in South Korea.

Cosmetics firm Amore Pacific, which runs the Laneige brand, is also benefiting from the buzz surrounding “Descendants of the Sun”.

 “The number of the so-called Song Hye-kyo lipstick searched on the Internet surged 11 times after the drama started to air,” the company says. “The lipstick [Laneige’s Two-tone Lip Bar] has become a best seller in March and sold out in some stores.”

According to 11st Street, a Korean online retailer that runs a Chinese-language site, sales of the Korean cosmetics brand Laneige’s blemish balm pact BB Foundation Cushion surged tenfold between March 14 and March 20.

“Korean dramas are usually released in China at least several months later and the sales of related products reflect that time lag,” says Yoo Sang-woo, a sales director for 11st Street’s Chinese shopping site. As ‘Descendants of the Sun’ is being aired in Korea and China simultaneously, customer response is almost instant.”

Even health products are seeing sales boom as a result of the success of the drama series.

Sales of Cheong Kwan Jang Red Ginseng Everytime, a 10ml packet of ginseng extract, grew 176 per cent from a year ago, according to the Korea Ginseng Corporation. The product appears as a health supplement for characters in the drama.

“Descendants of the Sun” was pre-produced by Korean film company Next Entertainment World for 13 billion won. This is significant as it is not usually easy for an entertainment company – particularly those with no ties to the big conglomerates – to secure this amount of funds prior to filming. 

Commercial banks are often reluctant to lend them money as production firms hold very little capital to offer as security. Not to mention the risky nature of the entertainment business. 

The production company reportedly secured 3 billion won through product placement investments, and the rest of the amount was funded partly by the South Korean government. 

The government recognises the impact of K-drama on exports and tourism. Since the late 2000s, it has run various hallyu support programmes including offering loans for production companies at low interest rates. 

Late last year, the state-run Export and Import Bank of Korea granted 3 billion won at a low interest rate for NEW, the production company behind “Descendants of the Sun”. 

Not anyone can get the financial support, says an official from the Service Industry Finance Department of Korea Eximbank, adding that the agency makes decisions by looking at whether the proposals have the potential to be a new hit. It also considers the popularity of cast members. 

It is difficult to pick out gems, says the official, adding that it is the duty of a state financial institution to nurture hallyu content production companies with great potential. The export promotion agency has already decided to grant another loan to NEW to help its market entry into China.

The drama has been exported to 27 countries so far. But the number is set to grow, the company said.

China and Japan have bought broadcasting rights to the drama series for $250,000 (Bt8.7 million) and $100,000 per episode, respectively. The show will be aired in an additional 25 countries, including the US, the UK, France, Italy, Germany, Russia and Saudi Arabia.

 

SUN SHINES

- In Thailand, “Descendants of the Sun” airs on TrueVisions’ KBS channel 232 and on MThai.com.