EPEX at the MBC Everything Show “Weekly Idol” at the MBC Dream Center on April 23, 2024 at Goyang, South Korea.
MBCPLUS | IMAZINS Getty images
Closed in the trade war with the United States and struggling with poor domestic consumption, China looks a bend in the unexpected sector: K-Pop.
He was announced April 28 that the K-Pop Epex group will perform in Fuzhou, Fujian in the province of May 31 – for the first time All-Korean idol group From 2016, he had a concert in continental China.
In addition, a large-scale annual dream concert-the elderly acting event K-Pop of South Korea-MA Apparently it has been planned Korean Association of Entertainment Producers in Hainan Province, which will take place on September 26 at the stadium of 40,000 places in the Hainan province.
These changes may signal the unofficial ban on China on the files of K-Pop on the continent after South Korea announced the distribution of the terminal air defense of the air defense defense at a high height in 2016, with China The statement that the system was aimed at limiting China's power in the regionamong others.
According to OH Jiwoo, a research analyst from CGS International Securities Hong Kong is a “structural turning point” for the sector.
Oh said CNBC, “This change in politics is part of a wider Chinese strategy for reviving national demand in connection with the prolonged slowdown in consumption.”
She noticed that consumption has contributed to the growth in Chinese gross product growth in 2018, but in recent years the share has dropped to lower 30%, and the increase in the consumer price rate in the country will increase by almost zero.
“In response, the government began to promote cultural events – including foreign pop concerts – in order to stimulate discretionary expenses for tourism, hospitality and local trade,” she added.
On April 25, the Chinese Ministry of Culture and Tourism published a notification calling for promoting cultural events, including concerts and music festivals.
OH pointed out that China is the third largest export market for South Korea albums after Japan and the United States and The second largest music market in Asia“Emphasizing your strategic importance despite the years of restrictions.”
Tariff resistant sector
Helping also in the K-Pop case in China is the fact that the sector is seen as resistant to a tariff.
Ji In-Hae Shinhan Securities wrote in a note on April 14 that “although the market is very unstable due to tariffs (entertainment and media), the tariffs do not affect at all, while the possibility of opening China is important.”
CGS “Oh said:” Drivers from basic revenues-concerts and content-free fans, which makes them resistant to cross-border tariffs. ” Even if fans buy albums and goods, exposure to the tariff is “irrelevant”, taking into account low unit prices and the loyal demand of fans.
“In contrast to semiconductors or cars, in which the global trade policy directly affects the supply chains and prices, the consumption of K-Pop is much less sensitive to protectiveistic means,” she added. Semiconductors and cars are two key exports of South Korea.
Last month, South Korea announced Support package $ 23 billion for semiconductor sector in the light of uncertainty around the US tariffs. The Trump administration imposed a 25% fee on all vehicles sent to the United States and another 25% on the import of steel and aluminum.
Hyundai and Kia from South Korea are one of Eight best bestsellers In the USA, according to Car Marketplace Carpro. The country is also Fourth largest exporter to the USA According to international trade administration as part of international trade administration as part of the US Trade Department.
Demmosatyczne Dtente
But analysts say that China's softening attitude has a diplomatic dimension that goes beyond the desire to increase national consumption.
Citi analysts John Wu and Alicia Yap said in the note on April 4 that China can try to restore bonds with neighboring countries, including South Korea, in the light of their own economic challenges.
Members of the group from South Korea twice during Mnet Asian Music Awards 2018 at Asia World Expo on December 14, 2018 in Hong Kong.
VCG Visual China Group Getty images
They said that cultural diplomacy could become a key starting point, which led to the relief of the informal bans of the content of South Korea and the resumption of revenue streams based on K-Pop fans in the region. The sector was described by them as a “long -term beneficiary (a) of the changing world order”.
OH CGS Echorza is, saying CNBC that “re-introduction of k-pop can help diversify cultural offers and support the regional value of good will.”
She added that China seems to be warming ties with South Korea, while putting temporary restrictions on some Western content, including Hollywood films.
Oh, he said that the change not only restores access to previously limited fans management, but also is an opportunity to deepen cultural involvement in Asia, which will put a basis for long -term structural growth in the region.
K-pop reserve catalyst
Development can be good news for K-Pop stocks.
The price of profits and shares of four largest k-pop companies as “big four” and all publicly mentioned beaten in 2024 it was despite Legions of loved fans, concerts of many cities and billions of YouTube streams seen all over the world.
However, it seems that the reflection takes place in the first few months of 2025, and three of the four companies registering a significant increase in annually.
The Chinese concert market would ensure a significant increase in 2025 if the unofficial country is banned from the South Korean artists. Joshua Kim from CGS wrote in the note on February 10 that the size of the Chinese concert market increased from $ 2.9 billion in 2019 to $ 8 billion in 2024, increases by 189% during this period.
“Therefore, if China raises the ban on Korean artists, we expect China to constitute over 25% of concert revenues in 2025, exceeding the contribution in 2016.” – he said.
Morgan Stanley Equity Analyt, Seyon Park, said that she would consider the re -opening of China “a potentially powerful catalyst” that can increase the number of earnings and fair value, although the re -opening will probably be gradual.
In OH, the approval of the EPEX concert is a “test matter of policy” that can pave the way for major deeds. She noticed that smaller fan events groups of girls twice, and Ive in Shanghai may indicate that China is starting with medium -sized acts before they achieve wider commitment.
Seul, South Korea – February 3: Ive participates in the 3rd mini album “Ive Empathy” at Conrad Seul in Yeongdeungpo -Feja 3 February 2025 in Seoul, South Korea. (Photo through Chosunilbo JNS/IMAZINS via Getty images)
Chosunilbo JNS IMAZINS Getty images
Epex is a relatively debutant in the industry who debuted in 2021, but Oh said that they are not isolated approval, instead there are a wider transition to high visibility events.
“Thanks to Hybe, Jyp, SM and YG already established on global trips in the arena, we expect that Korean agencies are moving quickly in earning demand after full abolition of restrictions. These changes strengthen the matter for the multi-phase scenario of re-opening and present a strong catalyst for the great four,” he said.
Or quote Song 2009 With 2ne1 yg entertainment K-pop says China: “It's been a long time, but now we're here.”