Hallyu fuels foreign investment in Korea

Chinese tourists shop at a duty-free shop in Seoul in this file photo.
/ Korea Times file

By Yoon Ja-young

Exports of Korean culture to China and Southeast Asia continue to rise, riding on the sustained momentum of "hallyu" ― "The Korean Wave".

The positive effects of the nation's entertainment industry are not limited to within its culture industry, according to the Hyundai Research Institute. The institute stated in a report that the Korean Wave has a direct impact in encouraging direct foreign investment back into the country through demand for products, and the tourism industry.

"Exports of hallyu-related goods have been increasing as of late, and the Asian market, in particular, is buying more," said economist Han Sang-wan, who led the study.

After analyzing data for 196 countries from 1995 to 2012, the study concluded that once the trend reaches a country, imports of Korean goods rise immediately. The analysis showed that a 1 percent increase of exports of Korean cultural content pushes consumer goods exports up 0.083 percent.

"It is believed that the popular wave further enhances awareness of Korea and its products, while promoting consumption of Korean goods," Han said.

He also noted the increasing number of foreign tourists coming into the country. Over 12 million foreign tourists visited Korea in 2013, with 9.8 million coming from Asia. Asian tourists accounted for 80.9 percent of the total in 2013, more than a 10 percent jump from 70.7 percent a decade ago.

"Foreign tourists to Korea have also been growing at a steady pace," Han said. "From looking at the latest statistics, we can safely conclude that the Korean phenomenon has had positive effects in the nation's trade and tourism."

Han explains that a 1 percent increase in Korean pop content exports to a country produces a 0.019 percent bump in tourism the following year. He added that visual content, such as Korean pop music videos and promotion videos to visit the country, are especially effective in attracting tourists to Korea.

Thanks to the growing number of tourists, travel revenue grew almost threefold to a record $9.7 billion in 2012 from five years ago.

The researcher also said that the phenomena directly led to an increase in foreign direct investment (FDI) in the service sector. Korea attracted $16.2 billion in 2012, the largest figure ever, as over half of the investment was poured into the service industry. The extra funding in the tourism sector is especially notable.

Foreign investment is another boon, stemming from the famed pop culture wave. Among Asian countries, China is most active in terms of investing in Korea. The country invested $1.4 billion in Korea's service sector last year, a sevenfold increase from 2001.

Han said that Korea should take advantage of the wave while it is still high. He suggested tying in the popularity of hallyu with manufacturing goods exports to further promote Korean brands and products.

"The country should promote Korean brands alongside its other products to present a positive image of the country," he said.

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