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The Peninsula

Turning Out the Lights?: The Impact of THAAD on Hallyu Exports to China

Published April 12, 2017
Category: South Korea

By Jennifer Cho

Ever since the decision last summer to install the Terminal High Altitude Area Defense (THAAD) missile defense system on the Korean peninsula, China has strongly opposed the system for security and political reasons. But instead of keeping the dispute in the political sphere, China has started to show its ire by imposing sanctions on Korean pop culture (Hallyu) content.

The State Administration of Press and Publication, Radio, Film, and Television, which supervises state-owned enterprises in the radio, film, and television industries in China, has not released any official statements about a ban on Hallyu content. However, an insider from the Chinese media industry said that the agency has given an unofficial order to ban Korean content from online streaming services, prohibit Korean celebrities from appearing on TV shows, and restrict cooperation with Korean entertainment companies. Additionally, there is a list of 42 Korean celebritieswho have been banned from Chinese media entirely, possibly in effect since last September.

The growing visibility of the missile defense system issue brought about an increase in anti-Korea sentiments in China and even a boycott on Korea goods. An online poll about the boycott of Korean stars has gained over 300,000 responses so far, and 87 percent of the respondents say they support the ban. The phrase, “No idol is above national interest,” has been spreading among Chinese internet users. Of course, those who might wish to argue against the ban on-line are prohibited from doing so.

Last October, the Korean Ministry of Culture, Sports, and Tourism conducted a survey about the effect of the THAAD retaliation on Korea’s domestic content industry. According to the survey, 80.6 percent of the surveyed companies agree that the deployment of THAAD will negatively influence their economic relationship with China. Among them, 35.3 percent of the companies responded that they have experienced direct economic loss due to THAAD deployment.

thaad chart

Currently, the China Office of the Korean Creative Contents Agency (KOCCA) has received notice of 17 cases where domestic content companies had suffered an economic loss due to the ban on Korean pop culture. These cases include five halted productions, five breaches of contract, two investment suspensions, one cancellation of a performance, and four business delays.

China is South Korea’s largest trading partner, making up 25 percentof the country’s entire export sector. According to Dr. Ingyu Oh, a professor of sociology from Korea University, the Hallyu market in China is worth just under $1 billion. Oh said that the installment of THAAD may lead to lost revenue in the Hallyu market, especially since exposure to k-drama and TV shows is highly correlated with consumption of k-beauty products and Korean food in China.

In the cultural content industry, Korean pop music became the first target of the Chinese retaliation. Most k-pop concerts that had been scheduled before the decision to deploy THAAD were carried out, but no concert with over 10,000 seats has been allowed since last October. EXO, a Korean boy band, was scheduled to have a concert at Nanjing’s Olympic stadium last December, but it was rescheduled and then eventually cancelled, as was the stop in Chengdu. The Chinese agencies did not state a clear reason why the concerts were rescheduled. The one concert that EXO was able to perform in China last year took place in Hangzhou in September, drawing a sold-out crowd of 12,000 and netting $1.5 million in revenue. Assuming the two other Chinese concert venues were similarly sized, that means a loss of $3 million for the group because of this controversy. Several other groups have seen similar cancellations.

Last year, Descendants of the Sun, a Korean TV drama, was a big hit in China. Unlike the usual Korean model of filming dramas as they air, this show was pre-recorded so that it could be played in Korea and China at the same time (and to satisfy Chinese censors, who require all content to be previewed before going on air). The show also saw investment from Chinese video-streaming site iQiyi, which paid $250,000 per episode ($4 million total) for exclusive streaming rights to the show. However, other k-dramas submitted after the THAAD announcement, like Legend of the Blue Sea and Saimdang, Light’s Diary, were supposed to be played on Chinese TV but did not pass the censorship standard. Recently, Huace Film and TV, one of the leading media companies in China that invested in Descendants of the Sun, has decreased the size of its branch office in South Korea. Fewer and fewer Chinese media companies are working with Korean production companies and their investment has been decreasing. As of now, there is no k-drama scheduled to be on air on any of the four major broadcasting companies in China.

In addition to banning k-dramas on TV, China has blocked access to k-content on online streaming services. Guardian: The Lonely and Great God, a recent romantic drama, became very popular in China even though it was not played on TV. The show’s 16 episodes were available at first, but were recently removed from Weibo, China’s main social media platform. Major online video streaming services no longer provide recent episodes of Korean TV shows. Further, Wangyi Cloud Music, one of the major music streaming sites in China, recently deleted the k-pop chart from its website after Korean company Lotte, which owns the land where THAAD would be deployed, officially decided to provide land for the missile defense system.

The ban on Korean pop culture has not been limited to Korean actors and pop singers, but has also affected Korean classical artists. In early January, a performance by the Korean pianist Paik Kun-woo and the Guiyang Symphony Orchestra, scheduled for March, was called off. Mr. Paik was replaced with the Chinese pianist Sa Chen. In addition to Mr. Paik’s case, soprano Sumi Jo was supposed to have a concert in three different cities this February, but her visa to China was rejected without any reason. Finally, last year, the Shanghai Ballet Company invited South Korean ballerina Kim Ji-young to perform Swan Lake, but recently notified her that she will no longer be part of the performance this April.

In the midst of an increase in anti-Korea sentiment and the boycott on Korean goods, there are still a number of Chinese people who watch Korean TV shows and listen to k-pop music. Before the ban on new uploads of Korean content, popular drama Uncontrollably Fond racked up more than 4 billion hits on Chinese site Youku, showing that many Hallyu fans remain undeterred by the THAAD row. The question will be how long this ban is sustained, and whether a long absence can make Chinese fans forget their favorite Korean stars.

Jennifer Cho is a graduate of Kalamazoo College and an intern at the Korea Economic Institute of America (KEI). The views expressed here are the authors’ alone.

Graphic created by Jennifer Cho. Photo from Peter Kaminski’s photostream on flickr Creative Commons.

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