Epex on the MBC Every1 selection present “Weekly Idol” at MBC Dream Middle on April 23, 2024, in Goyang, South Korea.
Mbcplus | Imazins | Getty Photos
Locked in a commerce warfare with the US and scuffling with weak home consumption, China seems set to make a U-turn on an unlikely sector: Ok-pop.
It was introduced on April 28 that Ok-pop group Epex will probably be performing in Fuzhou, Fujian province, on Could 31 — the primary time an all-Korean idol group has held a live performance in mainland China since 2016.
On prime of that, the large-scale annual Dream Live performance — South Korea’s longest-running Ok-pop occasion — has reportedly been scheduled to happen on Sept. 26 at a 40,000-seat stadium in Hainan province, the Korea Leisure Producers’ Affiliation mentioned on April 30.
These developments might sign an easing of China’s unofficial ban on Ok-pop acts on the mainland after South Korea introduced the deployment of the Terminal Excessive Altitude Air Protection missile protection system in 2016, with China saying the system was geared toward constraining China’s energy within the area, amongst different causes.
The about-face on Ok-pop represents a “structural turning level” for the sector, in line with Oh Jiwoo, analysis analyst at CGS Worldwide Securities Hong Kong.
Oh instructed CNBC “this coverage shift is a part of China’s broader technique to revitalize home demand amid a protracted consumption downturn.”
She famous that consumption contributed almost 70% to China’s gross home product progress in 2018, however the share has dropped to beneath 30% in recent times, with the nation’s client worth index progress hovering close to zero.
“In response, the federal government has began selling cultural occasions—together with international pop live shows—to stimulate discretionary spending in tourism, hospitality, and native commerce,” she added.
On April 25, China’s ministry of tradition and tourism launched a discover calling for the promotion of cultural occasions, together with live shows and music festivals.
Oh identified that China is South Korea’s third-largest album export market after Japan and the U.S., and the second-biggest music market in Asia, “underscoring its strategic significance regardless of years of restrictions.”
Tariff-proof sector
Additionally serving to the case for Ok-pop in China is the truth that the sector is seen as tariff-proof.
Shinhan Securities’ Ji In-hae wrote in a April 14 notice that “though the market may be very unstable because of the tariffs, [entertainment and media are] not affected by the tariffs in any respect, whereas the potential of China’s opening is legitimate.”
CGS’ Oh mentioned, “Core income drivers—streaming, live shows, and fan content material—are digital and intangible, making them resistant to cross-border tariffs.” Even when followers purchase albums and merchandise, tariff publicity is “negligible,” given low unit costs and constant fan demand.
“In distinction with semiconductors or autos, the place international commerce coverage immediately impacts provide chains and pricing, Ok-pop consumption is way much less delicate to protectionist measures,” she added. Semiconductors and cars are two of South Korea’s key exports.
Final month, South Korea introduced a $23 billion help package deal for its semiconductor sector in mild of uncertainty round U.S. tariffs. The Trump administration has imposed a 25% levy on all autos shipped to the US, and one other 25% on metal and aluminum imports.
South Korea’s Hyundai and Kia are among the many prime eight bestselling manufacturers within the U.S, in line with automotive market Carpro. The nation can also be the fourth-largest exporter of metal to the U.S. in 2024, in line with the Worldwide Commerce Administration below the U.S. Commerce Division.
Diplomatic detente
However China’s softening stance on Ok-pop has a diplomatic dimension that goes past the need to extend home consumption, analysts say.
Citi analysts John Wu and Alicia Yap mentioned in an April 4 notice that China might search to revive ties with neighboring nations, together with South Korea, in mild of its personal financial challenges.
Members of South Korean lady group Twice on the 2018 Mnet Asian Music Awards on the Asia World Expo on Dec. 14, 2018 in Hong Kong.
Vcg | Visible China Group | Getty Photos
Cultural diplomacy might emerge as a key place to begin, they mentioned, resulting in the easing of casual bans on South Korean content material and resumption of Ok-pop’s fan-driven income streams within the area. The sector has been described by them as “a long-term beneficiary of [a] altering world order.”
CGS’ Oh echoes that view, telling CNBC that “the reintroduction of Ok-pop might assist diversify cultural choices and foster regional goodwill.”
She added China seems to be warming ties with South Korea whereas inserting non permanent limits on sure Western content material, together with Hollywood movies.
Oh mentioned the shift not solely restores entry to a beforehand restricted fan financial system, but in addition presents a chance to deepen cultural engagement in Asia, which can lay the groundwork for longer-term structural progress within the area.
Catalyst for Ok-pop shares
The developments could possibly be excellent news for Ok-pop shares.
The earnings and share worth of Ok-pop’s 4 largest corporations — generally known as the “Large 4” and all publicly listed — took a beating in 2024. That is regardless of the legions of adoring followers, multi-city live shows and billions of YouTube streams seen worldwide.
However a rebound appears to be happening within the first few months of 2025, with three of the Large 4 corporations registering substantial year-to-date will increase.
China’s live performance market would offer a considerable enhance in 2025, ought to the nation elevate the unofficial ban on South Korean artistes. CGS’ Joshua Kim wrote in a Feb. 10 notice that the Chinese language live performance market dimension elevated from $2.9 billion in 2019 to $8 billion in 2024, rising 189% through the interval.
“Therefore, if China lifts the ban on Korean artistes, we anticipate China to account for greater than 25% of live performance income in 2025, exceeding the contribution in 2016,” he mentioned.
Morgan Stanley fairness analyst Seyon Park mentioned she would think about a China reopening a “doubtlessly highly effective catalyst” that might drive earnings and honest worth estimates considerably increased, although the reopening is prone to be gradual.
In Oh’s view, the approval for Epex’s live performance is a “coverage check case” that might pave the way in which for bigger acts. She famous that smaller fan occasions by lady teams Twice and IVE in Shanghai might point out China is beginning with mid-tier acts, earlier than progressing to broader re-engagement.
SEOUL, SOUTH KOREA – FEBRUARY 03: IVE attends IVE’s the third mini album ‘IVE EMPATHY’ press convention at Conrad Seoul in Yeongdeungpo-gu on February 03, 2025 in Seoul, South Korea. (Photograph by The Chosunilbo JNS/Imazins through Getty Photos)
The Chosunilbo Jns | Imazins | Getty Photos
Epex is a comparatively rookie group within the trade, having debuted in 2021, however Oh mentioned that these should not remoted approvals, as a substitute, they’re a broader transition towards high-capacity, high-visibility occasions.
“With HYBE, JYP, SM, and YG already positioned for international enviornment excursions, we anticipate Korean businesses to maneuver rapidly in monetizing demand as soon as restrictions are totally lifted. These developments reinforce the case for a multi-phase reopening situation and current a powerful earnings catalyst for the Large 4,” she mentioned.
Or to cite a 2009 tune from YG Leisure’s 2NE1, Ok-pop is telling China, “it has been a very long time coming, however we’re right here now.”