Backed by LVMH, Psy producer charts course into China fashion, music

[September 12, 2014]  By Joyce Lee

SEOUL (Reuters) - With big businesses like LVMH and Samsung for back-up, the South Korean music impresario who unleashed rapper Psy on the world in 2012 is laying plans to crack China's fashion and entertainment market - K-Pop style.

Yang Hyun-suk, head producer and major shareholder in management agency YG Entertainment Inc, says Korean pop culture's broad appeal in the region can give YG an edge in the Asian market, and especially China.

With up to $80 million in investment lined up from French luxury giant LVMH's private equity arm, Yang's plans stretch well beyond the music business.

"We're only at the starting point, but in areas YG will expand into from now - like in fashion or cosmetics - I think we might become strategic partners that can win-win in a big way," Yang said. He spoke in an interview with Reuters on Thursday at an event to launch a joint venture fashion brand with Cheil Industries Inc, Samsung Group's [SAGR.UL] fashion unit.
 

"$80 million is not much to pay for LVMH to gain such an edge," said Kim Min-jung, analyst at KB Investment & Securities.

At 43, former boy band member Yang's agency produces and manages K-pop acts like boy band Big Bang and girl group 2NE1, as well as Psy, that are gaining global influence in pop culture around the world. All three acts will feature in a showcase concert at a Beijing soccer stadium next month, sponsored by tech giant Samsung Electronics Co.

Founding YG initially to promote hip-hop in South Korea's mainstream pop-centred music scene, Yang has built a business now worth about $735 million by market capitalization - valuing his own stake at over $200 million.

YG artists are seen as having especially distinctive styling among K-Pop artists. Big Bang singer G-Dragon and 2NE1 member CL are among those building fashion icon status, appearing as front-row guests for designers' catwalk shows in New York and Paris.

Among the large K-Pop management firms, including S.M. Entertainment and JYP Entertainment, YG has been the most active in diversifying beyond music. It already plans a push into cosmetics with China's Huanya Group and local makeup manufacturer Coson Co Ltd.

"I've been in music for a while but it's been rather a late start in fashion," Yang said. "The greatest strength of K-pop is that artists have similar skin and eye color and appearance as these people."

(Additional reporting by Kahyun Yang; Editing by Tony Munroe and Kenneth Maxwell)

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