SM Entertainment, HYBE, and other domestic corporations have strengthened their businesses in China by partnering with Chinese entertainment companies or establishing local subsidiaries.
Since the launch of Lee Jae-myung's government, domestic corporations have quickly responded to expectations of lifting the ban on Korean pop culture (한한령) due to the improvement in South Korea-China relations.
China was one of the major markets for domestic corporations, but activities of South Korean artists were restricted after the deployment of the U.S. THAAD missile defense system in 2017.
The most proactive corporation in re-entering the Chinese market is SME. In May, SME secured a strategic partnership by becoming the second-largest shareholder (with an equity of 9.66%) in Tencent Music Entertainment, China's largest music platform company.
Currently, SME is establishing a multi-faceted collaboration system for content production, distribution, and fandom marketing in the Chinese market with Tencent Music. In particular, SME plans to debut a local idol group in China in partnership with Tencent Music within the next 2-3 years.
The goal is to combine SME's idol and content production capabilities with Tencent Music's vast user-based platform and distribution infrastructure to establish a new "idol success model" in the Chinese market.
After selling all shares held since its founding, the future competition in the Chinese market with Lee Soo-man, a key producer at A2O Entertainment who is currently expanding his entertainment business in China, is another point of interest.
Lee Soo-man introduced the five-member girl group 'A2O MAY' at the end of last year. Known as 'Lee Soo-man girl group' domestically, A2O MAY is increasing its recognition in China.
The leading domestic entertainment corporation HYBE established its Chinese subsidiary, 'HYBE China,' in Beijing in April. This marks HYBE's fourth overseas subsidiary, following those established in Japan, the U.S., and Mexico.
HYBE had been operating in China through subsidiaries' labels without a separate corporation. The establishment of this subsidiary is interpreted as a preparatory step for its Chinese business after the lift of the ban.
A HYBE representative stated, "HYBE China is focusing on supporting the local activities of HYBE Music Group artists," adding that the company intends to enhance the stability of its business operations in the Chinese market.
YG Entertainment has entered the post-ban Chinese market by acquiring 100% equity in 'YG Entertainment Beijing,' a Chinese corporation owned by its subsidiary, YG Entertainment Asia.
It is interpreted that YG is taking proactive measures in anticipation of the reopening of the Chinese entertainment market by converting its subsidiary YG Entertainment Beijing into a subsidiary to accelerate decision-making in its Chinese business.
A YG representative said, "We are still viewing the reopening of the Chinese market conservatively, but at the same time, we are preparing systems to quickly conduct business when opportunities arise."
Industry insiders believe that whether Lee Jae-myung, the president, and Xi Jinping, the Chinese president, discuss certain topics at the APEC summit in Gyeongju in October will determine the direction of domestic corporations' re-entry into the Chinese market.
An industry insider noted, "President Xi's visit to South Korea in October is something that entertainment corporations desire more than any other industry," adding that, "If it becomes possible for South Korean artists to hold performances in China, which have been blocked for the past nine years since the ban, it could serve as a growth driver for South Korean entertainment corporations."