As China’s economy faces pressures from a trade war with the United States and weakening domestic consumption, the country appears poised to re-engage with South Korea’s K-pop sector. China is South Korea’s third-largest album export market, behind Japan and the U.S. The Chinese concert market has been booming over the past few years. Experts predict its market to skyrocket from $2.9 billion in 2019 to $8 billion by 2024—a mind boggling 189% growth.
This revival of fortunes goes back to 2016. That same year, in retaliation to South Korea deploying the Terminal High Altitude Air Defense (THAAD) missile defense system, China instituted an unofficial ban on K-pop acts. From China’s perspective, this system posed a serious challenge to its regional power and influence. Despite what appears to be a growing divide since then, recent signs point to a thawing there.
On May 31, K-pop boy band Epex will perform in Fuzhou, Fujian province. On an individual level, this concert would be historic, as they would be the first all-Korean idol group to perform on mainland China since the ban was put into place. Whatever the outcome, this event will be a new precedent if we see more engagements between Chinese audiences and K-pop artists.
Furthermore, the high-profile, large-scale Dream Concert held annually with great fanfare across China is set for September 26 in a 40,000-seat stadium in Hainan province. On April 25, China’s Ministry of Culture and Tourism released a notice encouraging the reintroduction of cultural activities such as concerts and music festivals. This action perhaps marks the beginning of a trend toward more inclusive, reciprocal, and collaborative cultural exchanges.
Even the smaller K-pop acts are still creating big waves with their return activities. For example, K-pop girl groups Twice and IVE recently hosted fan meetings in Shanghai, suggesting that China could be lifting bans on lower-tier acts. The slow reopening the policy mirrors China’s overall attempt to stimulate domestic demand, particularly at a time when China is facing severe economic headwinds.
“This policy shift is part of China’s broader strategy to revitalize domestic demand amid a prolonged consumption downturn.” – Oh Jiwoo, research analyst at CGS International Securities Hong Kong
The K-pop industry is viewed as one of the biggest long-term winners from this development. And, industry analysts are calling it an exciting new frontier for expansion. International trade tariffs have great effects on international industries like semiconductor manufacturing and automotive production, but largely leave the entertainment and media sectors unscathed.
“Core revenue drivers—streaming, concerts, and fan content—are digital and intangible, making them immune to cross-border tariffs.” – CGS’ Oh
Tariff experts express confidence that consumption of K-pop would be less vulnerable to tariffs than other industries. This analysis arrives in the tumultuous wake of the continuing disruptive impact of protectionist policies. They hope that once China fully unbans Korean artists, the market can return to its former glory.
“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.” – CGS’ Joshua Kim
All the major agencies—HYBE, JYP, SM, YG—all have their sights set on returning to global arena tours. Analysts expect these companies to quickly commercialize to capture the pent up interest once limitations are completely lifted. For one, there is a hope that this provision might serve as a powerful earnings catalyst for these “Big Four” agencies.
“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.” – Shinhan Securities’ Ji In-hae
China’s apparent thaw with South Korea comes as the country is trying to diversify its cultural appeal. Tensions with Western nations remain high, particularly in regard to the importation of Hollywood films. Bringing back K-pop, apart from building political goodwill in the region, would significantly enhance cultural exchanges.
These dynamics, thankfully, are moving very fast. Such a view is gaining traction as K-pop emerges not only as an entertainment phenomenon, but potentially as an international relations strategic asset.