Korea's Growth and Hallyu
Hallyu may swell or subside, but the K-pop production machine goes ever on
Welcome to Curated by Kalani! I curate and compress investment topics with a focus on Asia-Pacific, optimizing my emails for maximum return on your time invested. I find, summarize and simplify important information so you don’t have to.
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G’day guys, gals and galahs. #42 here. A quote from Matt Barnes to start:
Violence is never the answer, but sometimes it is.
Here’s the format of today’s email:
Part 1: Korea: From Hermit Kingdom to Miracle on the Han
Part 2: Hallyu and Kpop
Part 3: Bonus Quirky Content - Something to Read, Watch, and Listen
Korea: From Hermit Kingdom to Miracle on the Han [Link]
This linked report is a deep dive into how South Korea turned itself around into an export powerhouse. Credit to reader and legend that is Off-Piste Investing for digging this one up.
The first paragraph aptly sums up how much of a basket case (no offence) it was in the early 1960s. The standard of living was not much high 1959 than it was in ‘45. Per capita income was lower than North Korea. Domestic savings virtually nonexistent, and foreign assistance was required to finance most domestic investment.
It’s crazy seeing how far South Korea has come. I love the place. So many interesting places, people, food and more. Imagine a child born today in Seoul and another in Sydney. I’d argue similar qualities of life, no? But imagine their grandmother, perhaps someone my mother’s age (love ya mum), who was born in the ‘60s, how different would a baby in Seoul and a baby in Sydney have it?
Okay, admittedly not quite apples for apples. But considering the starting points, South Korea is doing pretty bloody well for itself. Not the greatest data point for the quality of living, but going from GDP per capita of $158 to over $31,000 is no small feat. Australia hasn’t been a laggard either going from $1,807 to over $51,000 today.
Anyway, back to the source document at hand. A key part of South Korea’s success was its decision to focus on exports. In 1959, exports were 0.7% of GDP. A decade later exports were about 10% of GDP, and by the early ‘70s they reached 20% of GDP.
Exports were incentivized and driven by maintaining a realistic exchange rate, reduced taxes for exporters, unorthodox policies like low-interest loans for exporters, easy importation of raw materials, intermediate goods, and machinery needed to produce exports, and the removal of red tape related to exporting.
The South Korean and US Governments both wanted South Korea to succeed economically, but for vastly different reasons. Korea wanted to get out from under American dominance and intervention while the US wanted to reduce the level of grant assistance to Korea.
The Republic of Korea’s Economic Growth and Catch-Up: Implications for the People’s Republic of China [Link]
Hallyu and Kpop
Wtf is Hallyu I hear you ask? Basically means “Korean Wave”. relating to the rise of South Korean culture since the ‘90s thanks to K-dramas and Kpop. Your first experience with Hallyu may have been Psy’s Gangnam Style, BTS, or the movie Parasite. Either way, Hallyu here to stay. So I wanted to just take a little peek at Kpop and how it got so damn popular so damn fast.
How K-pop became a global phenomenon [Link]
Vox with the goods here. An underrated part of Kpop’s emergence has been due to the reformation of its democratic government in 1987, with its accompanying modernization and lightening of censorship.
Before the liberalization of South Korean media in the late ‘80s, the music produced by broadcast networks was primarily either slow ballads or “trot,” a Lawrence Welk-ish fusion of traditional music with old pop standards. After 1987, though, the country’s radio broadcasting expanded rapidly, and South Koreans became more regularly exposed to more varieties of music from outside the country, including contemporary American music.
And lastly, the reason for its latest success:
part of the reason K-pop has been able to make international inroads in recent years is that it’s been able to push against its own rigid norms, through the use of modern themes and sophisticated subtexts, without sacrificing the incredibly polished packaging that makes it so innately compelling. That would seem to be a formula for continued global success — especially now that South Korea and its culture has the world’s attention. Hallyu may swell or subside, but the K-pop production machine goes ever on
How BTS and K-Pop Explain the World [Link]
More so highlights how the US may be losing their cultural soft power overall.
The world of entertainment - like other industries -- is no longer dominated by Western majors. […] Turkish soap operas have been catching fire from the Middle East to Latin America (Turkish serials are the Latin telenovelas of today’s emerging world), Nigeria’s film industry (Nollywood) and African pop artists are exploding worldwide, hitting the Western cultural mainstream, and Netflix brings us top-notch serials from Latin America to the Middle East. Meanwhile, the Korean wave of music and entertainment, or Hallyu, seems to be growing ever faster and deeper.
I’ve plugged it in this newsletter a few times already but Emerging World is a great newsletter and highly recommend subscribing.
The Globalization of K-pop: the Interplay of External and Internal Forces [Link]
122 page PDF. Issa big boy. “YouTube provide the first mechanism for K-pop to reach the widest possible audience ever with much lower barrier compared to conventional media. To capitalize on YouTube to maximize potential global reach, the formula of K-pop put the same emphasis on visual as on audio. K-pop scene’s dedication to catchy melodies, eye-popping choreography, visually attractive group of boys and girls, colorful and vivid colors to achieve a positioning that would be effective for transnational consumption”
Why Is Everyone Obsessed with BTS? [Link]
“While a lot of K-Pop music tends to favor the general population, BTS knows that their audience cares deeply about their role in the world. They’ll call out class systems with ease, criticize consumerism and broach the taboo despite the discomfort it brings to older conservatives in South Korea.”
The business of HYBE [Link]
“HYBE is one example of a company born from the mind of a visionary wanting to do it differently, using great content, consumer obsession and technology to eventually build an innovation powerhouse. […] HYBE has fully understood that to win a game where any card on the playing field available was stacked against them they needed to go a different direction”
Lessons from K-pop’s Global Success [Link]
“In emerging market economies, already popular K-pop can be used to boost sales of Korean products there. In the US and European countries, rather than emphasizing national brand, K-pop stars and company brands can be linked in marketing.”
Effective marketing strategies in the K-pop industry [Link]
And before I forget…
Join the CbK Discord community where I share interesting content as I find them, share upcoming podcast guests and questions, and shoot the breeze with anyone that wants to :)
Something to read: China’s 80 Million Podcast Listeners and the Competitors Vying for Their Attention [Link]
Pretty cool snapshot of the Chinese podcast market.
While podcasts in the US are almost always offered for free while using ad placements to earn revenue, Chinese creators heavily rely on paid subscriptions, virtual gifts, and tipping to profit. [...]
podcasters encounter major barriers from governmental bureaucracy. Many must compete directly with propaganda content, which is oftentimes heavily promoted by podcasting platforms. Moreover, content creators face censorship from media regulators, and the level of censorship has escalated in recent years along with the surge of podcasts. The tough podcasting landscape in China has made it difficult for the majority of podcasters to draw substantial enough incomes to transition from side hustle to full-time hustle.
Something to watch: History of Kimchi [9 mins]
Yes, it’s narrated in Korean. But if you’re reading this you can read the subtitles, so tough it out. It’s an interesting aspect of what makes Kimchi so special.
Pickling vegetables ain’t new. But what made Kimchi special was the addition of red pepper powder, animal ingredients like salted shrimp, fish and other seafood. Which gave kimchi a rich umami taste not found in other pickled foods. Plus the cabbages are special. Original Korean cabbages were long and skinny full of green outer leaves. Chinese cabbage are short and fat with a lot of inner white leaves, which was much preferred for kimchi.
Something to watch: How South Korea Built a City Out of The Sea [16 mins]
A city from scratch! The story of Songdo is interesting because people argue that it’s a city with no soul. Which is fair. But all cities at one point or another had no soul right?
Something to listen to (from me): Christopher Hood on Compounding Curiosity [Transcript] [Apple Link]
A little different compared to the usual finance/investing stuff, but it’s all part of the plan! Loved branching out here and learning more about Japan’s Shinkansen. Honestly an engineering marvel. Highly recommend Chris’ book. I still remember reading it going from Tokyo to Hiroshima on the Shinkansen a few years ago now. Enough about me, Chris is super knowledgeable and thorough in his work!
Also, had me chuckling at this:
today in Japan, 50% of railway accidents happen at level crossings. I always think it’s a little bit of a strange phraseology for it to be saying that 50% of train accidents happen at level crossings, because by definition, I always think the train was supposed to be there, it’s probably the car that wasn’t supposed to be there. Because it’s a little bit unfair to brand it as a rail accident, but anyway, that’s how it gets done statistically.
My Takeaways / Favourite tidbits:
A lot of the JR companies often make more money on the land around stations, than the train lines themselves. Making money off the shops, kiosks and retail outlets at stations and accepting payments on the Suica card.
The headlights on Shinkansen are purely for passengers reassurance. They go too fast for headlights so they’re useless.
“Obviously there’s always a lot of symbolism when the Olympic flame is lit and so on. […] But the symbolic choice back in ’64 was even greater because the person who lit the flame was born in Hiroshima on the 6th of August, 1945. He was born in Hiroshima on the day of the bomb. How about that for symbolism?”
Rabbit hole/resource to dive into: Compounder Funds Investment Theses [Link]
Awesome collection of investment theses. Admittedly more US/Tech-focused. But too good to ignore! I’ve also interviewed Ser Jing, the cofounder of Compounder Fund, which you can check out here.
Bonus links that don’t fit anywhere else:
Evergrande: What Happens Next? (Part 2) [Link]
“If Xi Jinping is Zeus, then Evergrande is a vengeful Kratos scaling the walls of Mt. Olympus on the back of the Titans - represented by the excessive leverage of the wider Chinese economy.”
The night the lights went out in Guangdong [Link]
“The Great Cancellation hit mostly an increasingly unpopular class of decadent self-dealing super-rich. The Evergrande crisis was damaging but it was also borne out of an attempt to control runaway property speculation with the three red lines policy. But this was just an L for China, and yet another reason for foreign interests not just to look elsewhere with their money, but with their production facilities.”
Until next week, have a good one!