The figure is not big enough to have a drastic impact on the world’s 11th largest economy with a gross domestic product of $1.43 trillion. But it is still significant that a mere 13-billion-won production can generate this much effects, say market observers. 

The rough estimate of 3 trillion won is based on the amount believed to have been generated by another hit drama series “My Love from Another Star” in 2014.

Some Korean economists believe that consumers, particularly in Asia, desire to buy Korean products after being influenced by K-dramas.

Growing demand for Korean products fuels the nation’s exports and eventually stimulates the growth of manufacturing industry, according to a report by Hyundai Economic Research Institute.

“Descendants of the Sun” is expected to have much more far-reaching power than the previous hit, they said. Its 10th episode aired on Thursday last week reached new records in viewership of 36.4 percent in Seoul and 31.6 percent nationwide.

In China, the show has been viewed more than 440 million times cumulatively through streaming website iQiyi. The Chinese government has even issued warnings about the dangers of the Korean drama. Watching it too much could lead to legal troubles, the authorities said in a statement posted on Chinese microblogging portal Weibo. 

Set in a fictional war-torn country, the drama tells the love story between a solider and a surgeon, played by actor Song Joong-ki and actress Song Hye-kyo, respectively. It is a departure from the traditional plot of hallyu dramas as it weaves in a humanitarian tale with romance.

The reason why industry watchers, officials -- and even President Park Geun-hye -- are excited about the drama is that it is expected to boost hallyu again. Hallyu is a vital source that has boosted Korea’s income through merchandise, film and television program distribution, exports and tourism. But some raised concerns that the Korean Wave may be losing its steam in recent years.

They are taking notice of the potential economic impact of “Descendants of the Sun” as it also exposes a wide range of Korean products including major export items such as Samsung smartphones, Hyundai SUVs and lipsticks by Amore Pacific.

The drama also subtly features Korea’s rising industries such as medical and sustainable energy by using a movable medical facility -- known as medical cube in the drama -- and a solar plant.


Product placement


Some companies are cashing in on the popularity of the drama, which has helped raise their brand recognition rapidly.

Hyundai Motor, Korea’s largest automaker, expects the drama to generate 110 billion won worth of advertising effects and also to help the company raise its market profile in China.

It is one of the South Korean manufacturers that invested in the drama in exchange for exposure of their products.

“We signed a product placement contract with the drama producers as part of our marketing strategy to improve Hyundai’s market profile in China as the drama had hallyu stars Song Hye-kyo and Song Joong-ki as leading actors, and was to be exported to China (upon its release),” said Baek Byung-uk, a manager at Hyundai Motor.

China is a major export destination for Hyundai. But the automaker, which currently ranks fourth there with around 10 percent of market share, has been seeking ways to expand its market presence as well as its reputation.

“We export a lot to China, but we need to lift our reputation in the market to compete with other foreign carmakers like Audi and BMW,” he said.

Sales of Tucson, a sport utility vehicle that actor Song Joong-ki uses in the drama series, has already risen 10 percent in the local market.

Cosmetics firm Amore Pacific, which runs the Korean brand Laneige, is also benefitting from all the buzz surrounding “Descendants of the Sun.”

“The number of the so-called Song Hye-kyo lipstick searched on the Internet surged 11 times after the drama started to air,” the company said in an emailed statement. “The lipstick (Laneige’s Two-tone Lip Bar) has become a best seller in March and sold out in some stores.”

According to 11st Street, a Korean online retailer that runs a Chinese language site, sales of the Korean cosmetics brand Laneige’s blemish balm pact “BB Foundation Cushion” surged tenfold between March 14 and March 20.  

“Korean dramas are usually released in China at least several months later and the sales of related products reflect that time lag,” said Yoo Sang-woo, a sales director for 11st Street’s Chinese shopping site. As ‘Descendants of the Sun’ is being aired in Korea and China simultaneously, customer response is almost instant.”

Even health products are seeing sales boom as a result of the success of the drama series. 

Sales of Cheong Kwan Jang Red Ginseng Everytime, a 10-ml packet of ginseng extract, grew 176 percent from a year ago, according to the Korea Ginseng Corporation. The product appear as a health supplement for characters in the drama. 


Preproduction, distribution


“Descendants of the Sun” was preproduced by Korean film company Next Entertainment World for 13 billion won. This is significant as it is not usually easy for an entertainment company -- particularly those with no ties to conglomerates -- to secure this amount of funds prior to filming.

Commercial banks are often reluctant to lend them money as production firms hold very little capital to offer as security. Not to mention the risky nature of the entertainment business.

The production company reportedly secured 3 billion won through product placement investments, and the rest of the amount was funded partly by the Korean government.

The government recognizes the impact of K-drama on exports and tourism. Since the late 2000s, it has run various hallyu support programs including offering loans for production companies at low interest rates.

Late last year, the state-run Export and Import Bank of Korea, granted 3 billion won at a low interest rate for NEW, the production company behind “Descendants of the Sun.”

Not anyone can get the financial support, said an official from the Service Industry Finance Department of Korea Eximbank, adding that the agency makes decisions by looking at whether the proposals have the potential to be a new hit. It also considers the popularity of cast members.

It is difficult to pick out gems, said the official, adding that it is the duty of a state financial institution to nurture hallyu content production companies with great potential. The export promotion agency has already decided to grant another loan to NEW to help its market entry into China.

The drama has been exported to 27 countries so far. But the number is set to grow, the company said.

China and Japan have bought broadcasting rights to the drama series for $250,000 and $100,000 per episode, respectively. The show will be aired in an additional 25 countries including the U.S., England, France, Italy, Germany, Russia, Saudi Arabia, it added.

To boost tourism, the state-run Korea Tourism Organization also plans to hold a promotional event to introduce cities and sites featured in the drama. 

The destination includes Taebaek, a former mining city in Gangwon Province and Camp Greaves in Paju, north of Seoul, which was a former U.S. military base.


By Cho Chung-un (christory@heraldcorp.com)