Volume 1 2009 Chapter 60: Seeing the Essence Through Phenomena
"At first I thought it was a clash of political factions."
Yi Haoyan spread his hands.
"Everyone knows the relationship between CJ Group and the Lee family. Although it is not as strong as Samsung, it is also a chaebol."
"SM's current president Kim Young-min, is the nephew of former South Korean President Kim Dae-jung, and his political background is typical of the democrats. The two sides are typical opposing political factions. The suppression of SM by MNET can be understood as a struggle between political factions, which is a normal explanation."
"But," Yi Haoyan turned to look at Sun Enxi and said helplessly, "If this is the reason."
"It is inexplicable that Sister Eun Hee is involved in the advertising business of SM's artists."
"Political struggle is the cruelest. I believe Sister Enxi will not do such an unwise thing."
“So, the political reasons don’t make sense.”
"As for some rumors, saying that SM offended the top management of MNET and was retaliated against, I don't believe it. That is too childish. There must be a deeper reason, but I just don't know it."
Yi Haoyan spread his hands and ended his statement, waiting for his uncle's response.
"Hahaha! Ruhui! Your sister's little son is amazing!" Sun Hejae gave his wife a thumbs up, and as expected, his aunt gave him a charming roll of the eyes in response.
“That’s the right idea.”
“The direction is clear.”
"I didn't figure it out in the end because you are Chinese after all. You may not know some Korean history and industry news, and the lack of this information affected your judgment. "
"But it doesn't matter. You'll understand once I tell you."
"First, since you know Jin Yingmin's background."
"Then let me add something to your story. The first president of SM Entertainment, who partnered with Lee Soo Man, was named Kim Young Wook. He later went to jail. He is Kim Young Min's older brother and Kim Dae Jung's nephew."
"So you understood correctly that SM was originally founded by the Democratic Party."
"Moreover , SM Entertainment was one of the biggest promoters and beneficiaries of the 'Cultural Nation Strategy' launched by Kim Dae-jung after he came to power ."
"It was with the help of this policy and the power of the democratic camp that SM was able to become the dominant force in K-pop through its own efforts."
"Second, CJ Group is indeed a chaebol. You are right about that ."
"The Grand National Party, which we support and is now in power, is indeed a political rival to the Democratic Party, to which Kim Dae-jung belonged before. You are right about that."
"But there is one thing you may not understand. After all, there is no such thing as a chaebol in China. It's normal that you don't understand."
“We, CJ Group, are a chaebol.”
"Although we are not as good as Samsung, our stance and way of survival are the same as Samsung's. Chaebol is a special kind of existence, different from companies like SM that have a clear political imprint."
“They need to serve a certain political force.”
"And we don't need to stand in line."
Son Hyuk Jae bluntly said: "Chaebols will only choose to support political groups that are beneficial to them, thereby using political power to serve the overall interests of the chaebol."
"To put it simply, SM is a company that serves the democrats, while our CJ Group is a chaebol that manipulates politics for profit."
"Although South Korea's political forces have never given up fighting against the chaebols, and sometimes both sides have won and lost, it seems that nothing can be changed at the moment."
"We are fundamentally different from SM Entertainment."
"There is no political conflict between us, and there can be no such thing as a political conflict."
"This is why your cousin Eun-hee can do business with SM without worry."
"If it's not political, then what is it?"
After hearing so much explosive news, Yi Haoyan's eyes lit up for once.
“The conflict between MNET and SM Entertainment is essentially a conflict of interest.”
Sun Hyuk Jae took a sip of water and said slowly: "You may not know the business coverage of CJ Group. I will introduce it to you and you will understand it after thinking about it."
"CJ Entertainment is the largest entertainment media company in South Korea, with businesses covering all aspects of entertainment and cultural undertakings, including film, television, music, performances, media, and games, and MNET is a major part of CJ Entertainment."
"Give you some more time to think about it and see if you can understand the reason for this conflict."
"Can't you just say it?"
My aunt who was listening nearby complained dissatisfiedly.
"No, he's so smart, he must have figured it out!"
Yi Haoyan's outstanding performance made his uncle want to test him, but he was unwilling to explain the reason directly.
"Conflict of interest?"
Yi Haoyan realized that he had been thinking in the wrong direction, and his mind was working rapidly at this time.
Massive amounts of information were constantly extracted and combined in his mind, and rigorous logical reasoning and judgment were carried out. Various information was gradually pieced together into a complete answer.
"SM is an idol agency. Its main business is idol music business, which belongs to the music industry."
"In the structure of this circle, SM Entertainment is the content producer."
"For companies like this, the main source of profit is record sales and music source sales, as well as some concerts and peripherals."
"Music sales and sources are inseparable from physical music stores and online music platforms, and concerts are inseparable from the behind-the-scenes production team. These are all business areas of channel service providers."
He analyzed it carefully.
"MNET is a TV station and media group. It is a channel company that owns music platforms and concert production teams."
"From the perspective of economic structure, MNET and SM are in a docking relationship. SM's music needs to be distributed and sold through the channels represented by MNET in order to generate revenue. Are the two companies in a cooperative relationship to make money together?" Yi Haoyan scratched his head.
"Could it be that they failed to reach an agreement on the profit?"
"Hahaha!"
Sun Hezai laughed heartily, and his aunt Wang Ruhui couldn't help laughing as well.
"That's about it, but it's not that simple."
After laughing, Son Hyuk Jae added: "SM is the dominant company among idol agencies, and the music it releases is relatively popular. Of course, they can get some discounts when negotiating with channels like MNET. This is not the main problem. The problem is that these agencies see that the distribution is profitable, and they also want to get a piece of the pie."
“They want to do distribution too?”
Yi Haoyan said in surprise: "Isn't that stealing MNET's job?"
"yes!"
“Although there is no threat at present, it is not easy to create a channel. It requires a lot of money and resources.”
Sun Hezai said calmly: "But overstepping the boundaries is a taboo for chaebols."
"The reason why the chaebols in South Korea became chaebols is because our business groups were able to monopolize, divide up and control various important industries in South Korea."
“Other companies can only survive by relying on us.”
"In this way, the chaebols will last for a long time."
"Such attempts by companies like SM to become independent and disobedient must be suppressed."
“That’s the nature of the matter.”
