Financing key to boosting 'hallyu'

By Kim Tong-hyung

The popularity of Korea’s pop culture continues to grow worldwide as a certain pot-bellied rapper can attest. However, it remains to be seen whether the country’s television dramas, movies, music and games will ever become reliable export items like cars, televisions and mobile phones in a trade-dependent economy.

About 200 experts and stakeholders drawn from academia, banking and the creative industry convened at the Shilla Hotel in Seoul Thursday to discuss the economic potential of ``hallyu” (the Korean wave) and financial methods to foster it as an industry.

The conference, under the auspices of the Export-Import Bank of Korea (Korea Eximbank) and the Korea Creative Content Agency (KCCA), was just as much as about raising new questions than finding answers to old ones.

The government has been keen to promote the country’s new identity as a source of fun and hipness. And as it was with cars and technology products, the role model is again Japan, a nation that continues to set the standard for cultural coolness.

The main consensus coming out of the conference was that the growth potential of Korea’s creative industry is very promising. Korea Eximbank CEO Kim Yong-hwan pointed out that despite all the chest bumping by pop production houses, television studios, filmmakers and game companies, the Korean presence in the global market for cultural content is just a hair above 2 percent, barely a blip on American and Japanese radars.

Still, that is nearly double what it was a decade ago and the gap will become visibly narrower in the coming years when the hallyu industry will be growing at an annual rate of 6 percent, according to Korean government data.

Korean companies have edged their once-bigger Japanese rivals for supremacy in the production of electronic components like semiconductors, liquid crystal displays (LCDs) rechargeable batteries in recent years.

Now, a similar transition is taking place within the creative industry. The local industry is making steadfast inroads into Asian markets, hitherto dominated by Japan, observed Ko Jung-min, a Hongik University professor and head of the Korea Creative Industry Research.

While international demand for Korean cultural products is growing, the irony is that the majority of content creators complain about being underfinanced as banks and other financial institutions won’t touch them with a barge pole.

Creative industries will always be complex and unpredictable. And finance is an industry where acute pressure for profit coexists with fears of the unknown.

For every Psy, the rapper credited for developing the Internet’s most recent popular dance, there is a Shim Hyun-rae, a comedian-turned-sci-fi buff, whose works like ``D-War’’ and ``The Last Godfather’’ presumably place him among the ranks of the worst flops in showbiz history.

``When you talk with artists and production officials who are looking for financial investment for music, movies and television shows, you know that these are people driven by creativity. But there comes a time when their dreams collide with the cord, hard logic of business,’’ said Kwon Woo-suk, who heads Korea Eximbank’s division for future industries financing.

``You know the growth potential is there, but there is always the need to guard against the risks when the results of the investment turn out to be wobbly or downright disastrous.

As a state-run financer, Korea Eximbank is committed to helping cultural content firms struggling to cope with financial shortages. The structure of financial help, however, is rather complicated.

The bank and the Ministry of Culture, Sports and Tourism have each invested 10 billion won to the Korea Technology Finance Corporation (KOTEC), the state agency that guarantees loans to small- and medium-sized firms. With KOTEC providing protection against defaults, the bank will lend to content creators with their future revenue considered as security.

The bank offers its loans at low interest, with an additional condition of charging additional fees from a borrowing firm if it exceeds its projected revenue target on a funded project.

A recent success story for Korea Eximbank was a 150 million won investment in ``Korean Dinosaur Jeombagi,’’ an animated children’s film that became a box office hit after its release in January and has since been exported to 33 countries.

Eximbank plans to spend 1 trillion won in financing cultural content firms through 2016, particularly a list of 10 leading hallyu firms it expects to announce soon.