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Epex on the MBC Every1 selection display “Weekly Idol” at MBC Dream Center on April 23, 2024, in Goyang, South Korea.
Mbcplus | Imazins | Getty Images
Locked in a industry warfare with the United States and suffering with susceptible home intake, China seems to be set to make a U-turn on an not going sector: Okay-pop.
It was once introduced on April 28 that Okay-pop staff Epex shall be appearing in Fuzhou, Fujian, province on May 31 — the primary time an all-Korean idol staff has held a live performance in mainland China since 2016.
On best of that, the large-scale annual Dream Concert — South Korea’s longest-running Okay-pop tournament — has reportedly been scheduled to happen on Sept. 26 at a 40,000-seat stadium in Hainan province, the Korea Entertainment Producers’ Association mentioned on April 30.
Those tendencies may just sign an easing of China’s unofficial ban on Okay-pop acts at the mainland after South Korea introduced the deployment of the Terminal High Altitude Air Defense missile protection device in 2016, with China announcing the device was once aimed toward constraining China’s energy within the area, amongst different causes.
The about-face on Okay-pop represents a “structural turning point” for the field, in line with Oh Jiwoo, analysis analyst at CGS International Securities Hong Kong.
Oh informed CNBC “this policy shift is part of China’s broader strategy to revitalize domestic demand amid a prolonged consumption downturn.”
She famous that intake contributed just about 70% to China’s gross home product enlargement in 2018, however the proportion has dropped to underneath 30% in recent times, with the rustic’s shopper worth index enlargement soaring close to 0.
“In response, the government has started promoting cultural events—including foreign pop concerts—to stimulate discretionary spending in tourism, hospitality, and local commerce,” she added.
On April 25, China’s ministry of tradition and tourism launched a understand calling for the promotion of cultural occasions, together with concert events and song fairs.
Oh identified that China is South Korea’s third-largest album export marketplace after Japan and the U.S., and the second-biggest song marketplace in Asia, “underscoring its strategic importance despite years of restrictions.”
Tariff-proof sector
Also serving to the case for Okay-pop in China is the truth that the field is noticed as tariff-proof.
Shinhan Securities’ Ji In-hae wrote in a April 14 notice that “although the market is very volatile due to the tariffs, [entertainment and media are] not affected by the tariffs at all, while the possibility of China’s opening is valid.”
CGS’ Oh mentioned, “Core revenue drivers—streaming, concerts, and fan content—are digital and intangible, making them immune to cross-border tariffs.” Even if fanatics purchase albums and products, tariff publicity is “negligible,” given low unit costs and constant fan call for.
“In contrast with semiconductors or autos, where global trade policy directly impacts supply chains and pricing, K-pop consumption is far less sensitive to protectionist measures,” she added. Semiconductors and vehicles are two of South Korea’s key exports.
Last month, South Korea introduced a $23 billion toughen bundle for its semiconductor sector in gentle of uncertainty round U.S. price lists. The Trump management has imposed a 25% levy on all automobiles shipped to the United States, and some other 25% on metal and aluminum imports.
South Korea’s Hyundai and Kia are a few of the best 8 bestselling manufacturers within the U.S, in line with automotive market Carpro. The nation could also be the fourth-largest exporter of metal to the U.S. in 2024, in line with the International Trade Administration below the U.S. Commerce Department.
Diplomatic detente
But China’s softening stance on Okay-pop has a diplomatic measurement that is going past the will to extend home intake, analysts say.
Citi analysts John Wu and Alicia Yap mentioned in an April 4 notice that China would possibly search to revive ties with neighboring nations, together with South Korea, in gentle of its personal financial demanding situations.
Members of South Korean girl staff Twice on the 2018 Mnet Asian Music Awards on the Asia World Expo on Dec. 14, 2018 in Hong Kong.
Vcg | Visual China Group | Getty Images
Cultural international relations may just emerge as a key place to begin, they mentioned, resulting in the easing of casual bans on South Korean content material and resumption of Okay-pop’s fan-driven earnings streams within the area. The sector has been described through them as “a long-term beneficiary of [a] changing world order.”
CGS’ Oh echoes that view, telling CNBC that “the reintroduction of K-pop could help diversify cultural offerings and foster regional goodwill.”
She added China seems to be warming ties with South Korea whilst hanging brief limits on positive Western content material, together with Hollywood motion pictures.
Oh mentioned the shift now not most effective restores get entry to to a prior to now limited fan economic system, but additionally items a chance to deepen cultural engagement in Asia, which is able to lay the groundwork for longer-term structural enlargement within the area.
Catalyst for Okay-pop shares
The tendencies might be just right information for Okay-pop shares.
The profits and proportion worth of Okay-pop’s 4 greatest firms — referred to as the “Big Four” and all publicly indexed — took a beating in 2024. That’s regardless of the legions of adoring fanatics, multi-city concert events and billions of YouTube streams noticed international.
But a rebound appears to be going down within the first few months of 2025, with 3 of the Big Four firms registering really extensive year-to-date will increase.
China’s live performance marketplace would supply a considerable spice up in 2025, will have to the rustic elevate the unofficial ban on South Korean artistes. CGS’ Joshua Kim wrote in a Feb. 10 notice that the Chinese live performance marketplace measurement greater from $2.9 billion in 2019 to $8 billion in 2024, rising 189% all over the duration.
“Hence, if China lifts the ban on Korean artistes, we expect China to account for more than 25% of concert revenue in 2025, exceeding the contribution in 2016,” he mentioned.
Morgan Stanley fairness analyst Seyon Park mentioned she would believe a China reopening a “potentially powerful catalyst” that might force profits and truthful price estimates considerably upper, despite the fact that the reopening is perhaps sluggish.
In Oh’s view, the acclaim for Epex’s live performance is a “policy test case” that might pave the way in which for greater acts. She famous that smaller fan occasions through girl teams Twice and IVE in Shanghai may just point out China is beginning with mid-tier acts, ahead of progressing to broader re-engagement.
SEOUL, SOUTH KOREA – FEBRUARY 03: IVE attends IVE’s the third mini album ‘IVE EMPATHY’ press convention at Conrad Seoul in Yeongdeungpo-gu on February 03, 2025 in Seoul, South Korea. (Photo through The Chosunilbo JNS/Imazins by the use of Getty Images)
The Chosunilbo Jns | Imazins | Getty Images
Epex is a fairly rookie staff within the business, having debuted in 2021, however Oh mentioned that those don’t seem to be remoted approvals, as an alternative, they’re a broader transition towards high-capacity, high-visibility occasions.
“With HYBE, JYP, SM, and YG already positioned for global arena tours, we expect Korean agencies to move quickly in monetizing demand once restrictions are fully lifted. These developments reinforce the case for a multi-phase reopening scenario and present a strong earnings catalyst for the Big Four,” she mentioned.
Or to cite a 2009 music from YG Entertainment’s 2NE1, Okay-pop is telling China, “it’s been a long time coming, but we’re here now.”
