Could BTS help smooth over China-South Korea relations?

SEOUL/BEIJING (BLOOMBERG) - Chinese concert promoters are seeking permission for South Korean bands to perform in the country, according to people familiar with the matter, a sign of growing optimism that relations between the two countries are thawing.

Ties between Beijing and Seoul have been strained since South Korea agreed in 2016 to host a United States missile defence system strongly opposed by China.

No major South Korean musician has performed in China since, and promoters have not bothered to invite South Korean acts for a couple of years because of the perception that the government would reject such visa applications.

But they have recently started making such requests, according to the people, who asked not to be named because the topic is politically sensitive. It is unclear whether China's Ministry of Culture and Tourism is inclined to approve any of the applications, they said.

K-pop entertainers such as BTS, which last year became the first South Korean band to top the US Billboard charts, have not been able to get permits to perform in China for years as part of a broader campaign against South Korean businesses.

The rift prompted China to launch a slew of punitive measures that cost the South Korean economy billions of dollars in lost business.

That is why the stakes over these permits could be much higher than the fate of a few concerts.

"People are getting ready," said Mr Archie Hamilton, managing director of China-based music promotion company Split Works. "There is a lot of money there."

Shares of YG Entertainment Inc, which manages BlackPink, gained as much as 2.7 per cent in Seoul trading on Wednesday (Feb 20).

JYP Entertainment, the agency behind South Korean girl group Twice, rose as much as 1.4 per cent, while SM Entertainment was up as much as 2.9 per cent, compared with a 1.3 per cent advance of the benchmark Kospi index.

Big Hit Entertainment, the closely held manager of BTS, declined to comment. China's culture ministry did not respond to a faxed request for comment.

China's anger over South Korea's decision in 2016 to deploy the Terminal High Altitude Area Defence system, known as THAAD, came at a high cost.

Chinese agencies stopped selling group tours to the country, stores at South Korean retail giant Lotte Group suddenly started getting suspended for fire-safety violations and South Korean TV shows started disappearing from Chinese streaming services.

The Bank of Korea estimated that the Chinese backlash suppressed the smaller Asian country's economic growth by 0.4 per cent that year.

But there are signs that China's wrath is waning.

The ban on group tours was partially lifted in 2018, South Korean dramas are back on TV and K-pop songs are being promoted on Chinese streaming services.

K-pop has been relatively resilient despite the effective ban on performances, as demand for music from BTS, Girls' Generation and BlackPink have soared in China, according to Mr Bernie Cho, president at DFSB Kollective, which provides label services to hundreds of South Korean acts.

Political tensions did not keep Chinese Internet giants Tencent and Alibaba Group from having ties with South Korea's three largest music companies. South Korea's music industry generated US$98 million (S$132 million) in sales in China in 2016, its No. 2 overseas market after Japan, according to the Korean Statistical Information Service.

"K-pop is international pop in Asia," said Mr Cho. "Chinese companies are actively signing exclusive deals and investing in music companies, which is a testament to growing confidence in the market."

But musicians make far more money from touring than from recorded music. BTS, the first South Korean pop band to top Billboard's charts, made a reported US$40 million from its latest world tour.

"A lot of South Korean artists would like to tour (in China)," said Mr Jordan Corso, a booking agent at Beijing-based promoter Modern Sky Entertainment. "It's too big a market."