In July 2016, the U.S. and South Korea announced that they would deploy the U.S. Army's Terminal High Altitude Area Defense System (THAAD) in South Korea as part of their defense against possible North Korean missiles.
China – one of North Korea's most important political and economic ally – has been fiercely vocal of its opposition to THAAD, citing the military radar's threat to the Chinese national security interests.
In the following weeks after the announcement, news sources noted an apparent Chinese ban on Korean entertainment in retaliation. News surfaced of Korean pop stars being removed or edited out of Chinese broadcasts and Korean concerts in China being cancelled for no apparent reason.
China is Korea's biggest entertainment export market. And with the K-pop ban in effect, by August 2016 – just one month after the THAAD announcement – South Korea's "Big 3" entertainment companies, SM, YG, and JYP, all experienced dramatic drops in their share prices.
However, while Korean entertainment companies have suffered a huge financial blow from the Chinese ban on K-pop, this is arguably their opportune chance to lessen their reliance on the Chinese market.
In the age of technology and social media, reaching international markets is easier than ever, allowing for the ability to release more digital content to a wider audience. International fans often translate K-pop media to their respective languages, eliminating the language barrier and allow for more direct engagement between Korean idols and their foreign fans. Focusing on international digital distribution can establish the solid base needed for world tours.
But which global markets seem most viable in cultivating a solid K-pop fan base?
The obvious candidates include East Asian countries where there has always been a steady interest in K-pop. And companies have always taken full advantage of this proven market, especially in Japan, where K-pop acts often plan a separate debut with Japanese editions of their work. Southeast Asian countries like the Philippines, Thailand, and Singapore have also been easy markets to maintain.
One big question is if K-pop is global enough to make it in mainstream western media where the majority of western musicians find their global success. While we've seen some great breakthroughs in the U.S. with Korean acts like Big Bang, PSY, and EXO – who've all found success in sold-out shows and a healthy fan base – it hasn't been quite enough to break K-pop out of its "niche" genre mold in the west.
Even with BTS's recent popularity catapulting them to become the first K-pop group to snag a Billboard award for Top Social Artist beating out top western artists like Justin Bieber and Selena Gomez, it's still too soon to comment on the longevity of K-pop in mainstream Western media.
Europe seems to be a case of uncharted territory with only a handful of K-pop acts ever having tours in European countries. In 2012, during the Alive Galaxy Tour, Big Bang sold out both their first European concert dates as well as their additional added date in London. Despite their UK success, they have never returned to Europe… Not even during their 2015-16 MADE World Tour.
Last year, B.A.P and MYNAME were the only acts to offer a couple of European dates at small venues with varying success.
But last year, KCON – an annual Hallyu convention held in various locations around the world – had it's first European conference in France. Acts included, SHINee, Block B, BTS, f(x), I.O.I, and F.T. Island. Over 10,000 tickets sold out in just a few minutes.
Though there isn't enough data to gauge European fan engagement, perhaps now is the time to take risks to gain a foothold in untapped markets.
Finally, South America could be the most promising market for K-pop expansion, and we see some companies taking advantage of the potential by sending their acts to Latin countries.
BTS recently had four sold out nights in Brazil and Chile, with their management company Big Hit Entertainment telling the New York Times that they were confident in their ticket sales because they confirmed Latin American fan loyalty and engagement through social media statistics.
Similarly, newcomer K.A.R.D has experienced a spike in Brazilian popularity, having to add a second date to their Sao Paulo show in addition to their scheduled fan sign events across four different Brazilian cities.
Will focusing on foreign digital distribution and social media engagement be enough for companies to survive Korea's current political tensions? It's too soon to say. But in the midst of being shut-out from China, Korean entertainment companies shouldn't be afraid to take risks in other countries not only to replace that lost revenue, but also to break from their historic dependency on Chinese consumers.