Presidents, Xi Jinping and Moon Jae-in sent each other polite messages. But neither mentioned the current political stand-off.
That’s because the two countries also recently marked the first anniversary of China’s cultural and economic blockade of its near neighbor and previously one of its busiest trading partners.
Diplomatic sources point to the South Korean decision to allow the U.S. deployment of the Terminal High Altitude Area Defense (THAAD) missile system on Korean soil. South Korea and the U.S. argue that the missile shield is necessary protection against an increasingly belligerent and nuclear armed North Korea. China argues that the missile system’s radar allows spying into Chinese territory.
While the military and political arguments continue, South Korean entertainment content has disappeared from view in China. Literally. Where Korean TV shows were already on air in China, Korean faces were blurred out. In other instances Korean names were replaced with Chinese names in the credits.
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Since July last year, when the THAAD deployment decision was taken, Korean film and TV rights sales to China have collapsed. Co-productions, previously flourishing as Korean firms repackaged their commercial skills and proven IP for the massively larger Chinese market, were halted or abandoned.
K-pop bands, many of which had carefully included one or two mandarin speakers, soon ceased touring. And Korea’s post-production and VFX industry, which for many years has provided attractively-priced services to Chinese productions, found itself losing orders.
While Korean films have been the mainstay of major festivals including Cannes and Berlin, neither the Beijing festival in April or the Shanghai festival in June included any in their lineup. At last December’s Macau film festival, mainland Chinese media refused to cover any of the Korean movies – including prize-winner and Asia-wide box office sensation “Train to Busan.”
While it is difficult to measure the cost of losses across the entire Korean entertainment industry, the share prices of Korea’s three leading talent agencies provide some indication. SM Entertainment is down 18% since July 2016, representing a $150 million loss of market value. YG Entertainment is down 32%, representing $230 million of reduced market capitalization. In contrast, JYP, which has little China exposure, is up 32%.
Several commentators held out hope that the ban on Korean content would dissipate after South Korea elected a new president, who advocates dialog with the North’s Kim Jong-un. But instead the blockade has continued unchanged.
The Beijing office of the Korean Creative Content Agency says it has not been approached by any company this year for rights sales support or remake deals.
“We were expecting to see things get better as the new government took over, but that isn’t the case. Recent Chinese TV series starring big Korean stars such as Jang Dong-gun have ended up not airing at all. (Chinese media regulator) SARFT set even tighter restrictions on TV last month,” said one Korean producer who had been based in China, but has now returned to Korea. He spoke on condition of anonymity.
“Not only are programs starring Korean talent banned, but also shows that are based on foreign formats can no longer be broadcast during prime time. The prospects remain poor. Most Korean staff who were in China have returned home.”
Hotels to cinemas conglomerate, Lotte appears to have been singled out for punishment. Construction of its theme park in China has been halted on dubious safety grounds. And this week, items were confiscated from its Chinese supermarket chain. It is not clear whether Lotte and CJ-CGV’s many multiplexes in China have been affected.
Other business sectors have seen similar declines. Kia and Hyundai Motors this year have sold less than half the number of cars than in the same period of 2016. Korean cosmetics and tourism industries have also suffered. But no end is in sight.
“The THAAD agenda is currently the biggest impediment to the development of the two countries’ diplomatic relations, perhaps even the most difficult one since the establishment of bilateral ties,” said Chinese ambassador to South Korea Qiu Guo Hong at a seminar in Seoul on Monday.