Alibaba Invests in Korean Talent Agency SM Entertainment

Chinese e-commerce giant Alibaba is to pay $29.7 for a 4% stake in SM Entertainment, one of South Korea’s leading talent management and music packaging companies.

SM is behind K-pop acts including Super Junior, EXO, Girls Generation, f(x), and superstar soloist BoA. It also manages actors including Kim Ha-neul, and Kim Min-jong, while its Galeria label represents leading woman golfer Park In-bee.

The publicly-listed SM issued new shares to Alibaba, SM said in a statement.

The company said that the agreement is expected to help SM expand into the mainland Chinese market, particularly in the music and marketing sectors and online music distribution. Under its Ali Music unit, Alibaba’s music apps Xiami and Tiantian may set up branded channels for some of SM’s groups.

China recently contributed significant growth to SM’s earnings, though that appeared to come from concerts and touring. The Alibaba deal could help to roll back piracy and allow SM to start earning significant revenue from streaming services. SM also has business deals with Baidu and Tencent.

Relations between the Chinese and Korean entertainment industries have flourished in the past couple of years at both corporate and artistic levels. In late 2014 China’s Huace became a major backer of leading independent film distributor Next Entertainment World, while Fosun International also has a stake in SM.

Film co-productions between Korea and China have flourished, while numerous K-pop acts have added Mandarin-speaking members in attempts to establish fan bases in the massive mainland Chinese market.

Korean TV dramas, with their high production values and strong story lines, have become massively popular in China, especially through online platforms. Chinese regulators somewhat disrupted the flow of Korean pop-culture into China last year when they required complete runs of series to pass censorship before being allowed to air. While that quickly limited imports into China, it also helped push companies into co-production and co-investment deals.

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