I often pass by the giant square arch that stands in Itaewon, Seoul’s most diverse neighborhood. Below it is a glass-walled structure containing a café and music library. Sometimes, I drop by just to take in the night view outside: a low skyline of brown brick villas and flickering lights. But my plan to take friends from Singapore to the building recently was confounded when I found out that only certain people — specifically, Hyundai Card holders — can access the music library on the second floor.
The library is part of a mini cultural empire developed by one of South Korea’s leading credit card providers as part of an intense strategy of “cultural marketing.”
South Koreans are avid credit card users. In fact, they own an average of 3.6 credit cards each, compared to figures of 2.6 and 1.5 cards per capita in the United States and the United Kingdom, respectively, according to Korea Financial Telecommunications and Clearings Institute in August 2017.
With such a level of market saturation, competition between credit card providers is bound to be fierce.
In apparent acknowledgment of its Hyundai Card’s cultural marketing strategy, other South Korean credit card providers have followed its lead, building images for themselves as culture providers in a bid to gain an edge in the country’s hypercompetitive industry.
The story of Hyundai Card’s renaissance is widely known in South Korea; The company, a subsidiary of leading chaebol Hyundai Motor, has been featured in a variety of case studies and local media reports. Diners Club Korea, the company that became Hyundai Card, had just a 1.8 percent share of the market when parent company Hyundai Motor bought and renamed it in 2001. Now, Hyundai Card is South Korea’s fourth biggest credit card provider, with a 12.8 percent share of the market as of late 2017.
Many credit Hyundai Card CEO Chung Tae-young, who took the helm in 2001, for the company’s surge. In 2003, South Korea experienced a massive crash in the credit card market as a large number of consumers defaulted on their loans. Many credit card companies were on the brink of collapse, but Hyundai Card persevered, creating a series of popular products such as a series of “Alphabet cards,” and eventually venturing into organizing mass cultural events.
Since the mid-2000s, the company has been bringing world-class athletes, and musicians to South Korea in a series of high-profile matches and concerts. Big names flown in to perform include Stevie Wonder, Beyoncé, Lady Gaga, Coldplay, Billy Joel and Maria Sharapova.
Independent experts declined to speculate on the effects of the strategy, saying it was impossible to prove a direct correlation between such cultural marketing and profit. But Hyundai Card itself describes cultural marketing as the “driving force” behind its growth.
The company also runs multiple cultural venues that are, it says, helping it “increase channels of contact with the public.” Such locations include Vinyl & Plastic, where visitors can listen to and buy from a selection of 9,000 vinyl records and 16,000 CDs; the music library in Itaewon, with a collection of 10,000 rare records and more than 4,000 music-related books; and a design library in northern Seoul’s Bukchon neighborhood. Elsewhere in Seoul are a travel library and a cooking library.
Hyundai Card’s competitors have been taking note. In 2017, Shinhan Card, the number one player in the industry, re-branded its Facebook page as “Shinhan Card Culture Factory.” The page contains no mention of credit cards at all, despite ultimately being a platform to promote them. Instead, it attempts to convey uniquely Korean stories featuring local small and medium enterprises. One such example is an introduction to Seoul Collector, a small business that collects vintage objects that illustrate Seoul’s history; another is a list of book cafés operated by boutique publishers.
According to its own book, “Deep,” Shinhan Card has two goals for its SNS channel: becoming a “feeling partner” by relaying trendy information in the language of young adults; and being a “consumption partner” by providing customers with “rational consumer information.”
The future looks bright for South Korean credit card companies. Despite the intense competition in the industry, business is still lucrative — the total value of credit card transactions rose from 578 trillion won in 2012 to 694 trillion in 2016.
According to research firm Euromonitor Korea, the Bank of Korea is trying to bring about a cashless society by 2020 and “encouraging more consumers to spend through financial cards at convenience stores or drugstores.”.
“In addition, as more consumers use credit cards in South Korea, even though this is only for small amounts, the number of transactions and their total value will increase during the forecast period,” the firm claimed.
Cover image: Hyundai Music Library in Itaewon. (Photo by Kyungsub Shin)