Korea's ascent on the global stage is a masterclass in visionary strategy and tenacity.
My family and I recently spent 2.5 weeks in South Korea. We hired a Kia Carnival and drove around Seoul, Jeju and Busan immersing ourselves in Korean food and culture. The choice of Korea for the family holiday was easy, Korea's appeal lies in its deep-rooted culture, brought to the forefront by phenomena like K-pop, Korean movies, and TV dramas.
As a child who grew up being exposed to the allure of Korean entertainment and the success of conglomerates like Kia, Hyundai, LG, and Samsung, my recent holiday in Korea served as a transformative experience, bridging the gap between what I knew from screens and the tangible vibrancy of Korean life.
Strolling through the bustling streets of Hongdae and Myeong dong, you could feel the pulse of Hallyu (the Korean Wave) – from the K-pop tunes emanating from stores. But juxtaposed against this pop culture haven was the serenity of places like the Gyeongbokgung Palace, reminding us of Korea's rich history.
World class malls like Lotte World, skyscrapers and tech parks narrate tales of a nation that, through sheer determination and innovative government policies, has made its mark on the world stage.
But why was Korea so top of mind? Why was it such an easy choice? How did a war-torn nation become such an outlier not only in economic development but also in cultural exports?
Without further investigation one might have thought that Korea’s global success was just happenstance. However, the truth is Korea's ascent on the global stage is a masterclass in visionary strategy and tenacity.
When it comes to economic marvels, Korea’s outlier performance is staggering. South Korea, with only about 0.7% of the world's population, consistently ranks within the top 12 in global GDP. In 2019 Korea was the 8th largest exporter and importer in the world. Korea's stock market, the Korea Exchange (KRX), consistently ranks top 15 among the world's major stock exchanges in terms of market capitalisation and volume. This disproportionality between its population and economic output is a testament to its economic prowess.
South Korea, in the 1960s and 1970s, embarked on an ambitious industrialisation drive, offering incentives and financial support to budding industries, especially electronics and semiconductors.
Chaebols like Samsung, Hyundai, and LG, have also been pivotal. These entities, backed by the government during their formative years, expanded aggressively into diverse sectors, including electronics, automotive, and shipbuilding. Their integrated approach, vertical structures, and vast resources allowed for massive R&D ventures and swift commercialization of technological innovations. South Korea consistently ranks among the top countries in terms of R&D expenditure as a percentage of its GDP.
It’s no coincidence that R&D fuelled technological prowess was a major contributor to Korea’s success.
However, little is talked about the soft power of culture and storytelling that has accelerated Korea’s ascension. Decades ago, the Korean government began investing in culture as a strategic asset. Initiatives like state-sponsored programs, dedicated film councils, and artist training stood as pillars of this vision. A screen quota system, ensured that cinemas reserve a significant number of days for local films, speaks volumes of Korea's commitment to nurturing its cinematic heritage amidst the influx of foreign content.
The early introduction of filmmaking in the school curriculum ensures the country's artistic legacy evolves and continues to thrive. Similarly, music is a core subject in primary and secondary schools with some schools going so far as to create K-Pop classes for their students.
The result is Korea’s staggering stature in the global music industry. Despite contributing just 8% to global output, it ranks as the world's sixth most profitable music sector. This strategic approach not only enhanced Korea's soft power on the global stage but also fostered an environment wherein conglomerates like Samsung and Hyundai could thrive, riding the wave of Korea's burgeoning global identity.
My Korean vacation was enlightening, merging familiar cultural resonances with newfound economic insights. Witnessing a nation that seamlessly bridges its cultural legacy with economic dynamism was a profound experience.
Through the lens of a tourist who has been shaped by the great storytellers of Korea, diving into its actual culture, landscapes, and cities was enlightening. It was a testament to a nation that has, through vision, resilience, and cultural pride, built an identity that resonates with people worldwide.
Korea's success is a tale of long-term investment and the importance of great storytelling.
Note: Korea is an important reference market in Aura Private Equity’s “time machine” investment strategy into South East Asia. Download our whitepaper on this here.
Until next month,
Calvin Ng
Managing Director
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