1.
South Korea’s beauty and skincare industry has become the second largest superpower in the world, immediately following France which dominates the field, and has already bypassed the US. At the current pace of the past two years, the day will yet come when the Koreans will overtake the French and become the primary cosmetics superpower in the world.
The decline in the purchasing power of the public in China, due to the slowdown in the growth rate of economic activity in recent years and a decrease in purchasing power, directed South Korean companies to export skincare products toward the West. The revolution is twofold: If in the past, the export of skincare products was dominated by relatively veteran companies, Amorepacific and LG Household & Health Care, whose business model was based on luxury department stores in China, then after the business policy of the major companies in South Korea suffered a fatal blow, the leadership has now shifted to companies based on marketing through social networks.
And so, in place of the veteran companies, a new generation of fast and technological companies has emerged, known as “indie” brands, Indie Brands, which operate flexible production lines and market directly through TikTok, Amazon, and Western chains such as Target and Sephora, for instance, the new brands Beauty of Joseon or Round Lab. The social networks are what determine the trend, and according to data from the Korean Ministry of Food and Drug Safety, MFDS, in 2025, local cosmetics exports surged to an all-time high of 11.4 billion dollars – an increase of about 12% compared to 2024.
2.
In many respects, South Korea is similar to Israel in the economic, macroeconomic, and business fields. From a ruined country, both due to the exploitation and destruction planted by the Japanese when they turned it into a colony for economic exploitation between 1910–1935, and subsequently the Korean War in the early 1950s, into a global economic superpower. Korea’s R&D expenditures relative to GDP are immediately after Israel, which continues to stand at the top with 6.35% of its GDP, while the Koreans stand at 4.94%. The US is in third place with 3.45%; Japan, which the Koreans taunt but also view as a role model, with 3.44%. Germany, the fading superpower of Europe, with 3.15% R&D expenditures relative to GDP.
The Republic of South Korea, to which there are direct flights from Israel, presents one of the most fascinating success stories in modern economic history. From a destroyed country, torn apart to this day between the two Koreas when the 38th parallel was set as a border, which was completely damaged after the Korean War when its GDP per capita was lower than that of most sub-Saharan African countries, it leaped to the status of a global technological and industrial superpower.
This unprecedented flourishing, known as “the Miracle on the Han River”, was built on a unique combination of centralized, rigid, and ruthless government planning, as the administration in South Korea demanded seven working days a week with long hours every day in giant and predatory family conglomerates, known as chaebols. Now it has become a country with extraordinary national resilience and aggressive investment in human capital accompanied by R&D in all fields and at the forefront of the memory chip revolution for the artificial intelligence industry conquering the world.
The South Korean economy stands at a turning point with the current economic leap driven first and foremost by the AI revolution and the widespread global demand for advanced memory chips, alongside the upgrading of the global automotive industry, the flourishing of the aforementioned dynamic cosmetics sector, and structural changes in the capital market. Enthusiastic households are eager to invest in the local stock exchange following foreign investors in order to capture a share of South Korea’s uniqueness in the field of the super-advanced chip industry, tailored for artificial intelligence.
South Korea’s main index, the KOSPI, rose by 218% in the past year, and the KOSPI 50 index rose by 335% in the past year! The stock index of the second-best performer in Southeast Asia, Taiwan, which has the largest memory chip industry in the world and where TSMC is located, rose by 120% and the 50 index by 143%. For comparison, the NASDAQ rose by 42% in the past year and the indices in Israel by 57%.
3.
South Korea’s achievement occurs under the cloud of the constant security threat from the neighbor to the north, with American protection and the deployment of 28,500 soldiers at a budgetary cost of 1.13 billion dollars a year for the Koreans. As mentioned, the hottest field standing at the top of industrial exports in the country that brings about a surge in economic activity is the chip and related equipment market. This industry experienced a sharp transition from regular business cyclicality to long-term structural growth, against the backdrop of an immense global demand from server farms for hardware supporting large language models and updated artificial intelligence.
The two leading companies in the field of memory chips and related equipment are SK Hynix and Samsung Electronics. SK Hynix, a supplier of Nvidia and a success story in its own right, has positioned itself as a distinct global leader in supplying high-bandwidth memory chips and has moved to mass production of processors in the field of artificial intelligence. In fact, there is no end in sight to the rise in profitability of the company that has become the central growth engine of the high-tech sector in South Korea.
The second company, which you know, is Samsung, which constitutes between 13% and 22% of South Korea’s GDP, depending on the definition, and combines the production of memory chips, contracting for the production of equipment for other companies in the field, with an achievement of producing chips at a size of 2 nanometers. Naturally, around the chip industry, an ancillary industry is developing through the economic multiplier for the entire South Korean GDP.
You are also closely familiar with the South Korean automotive industry, with companies like the Hyundai–Kia group that began their path by imitating the Japanese automotive industry, under license, and made a leap forward to become advanced vehicle manufacturers. The transition to electric vehicles gave momentum to the South Korean automotive industry, which exports to Europe and the US in growing quantities.
The vehicles are shipped around the world on ships made by South Korea’s massive shipyard industry, such as Samsung, Hyundai, and Hanwha Ocean. While China leads in the total quantity of building simpler merchant ships, Korea maintains dominance in building ships with high technological added value, liquefied natural gas transport tankers, ships powered by green fuels, and sophisticated giant container ships.
4.
The meteoric rise of the South Korean entertainment industry is a phenomenon known worldwide as Hallyu, the South Korean Wave. This is one of the most fascinating stories today in the Korean economy and in modern culture worldwide. What began as a cultural rehabilitation attempt after the Asian economic crisis of the late 1990s has turned into a global export industry that rolls over billions of dollars and changes the consumption habits of hundreds of millions of people.
The export volume of South Korea’s content industry reached 14.9 billion dollars in 2025 after 14.1 billion dollars in 2014. Computer game exports 8.5 billion dollars, music 1.8 billion dollars, and television dramas 1.26 billion dollars. The growth came after the South Korean government identified the cultural field as an economic growth engine. The government consistently invests huge budgets in subsidizing film funds, establishing technological infrastructures, and easing regulation on cultural export.
The Korean Ministry of Culture has even set a goal to expand the “Hallyu” market to about 265 billion dollars by the year 2030. The streaming platforms of giant companies like Netflix, Disney Plus, and Apple TV identified the potential and invested billions of dollars in original Korean productions. These platforms solved the traditional distribution problem and brought Korean content directly to screens in the West, at the click of a button, with dubbing and translation into dozens of languages.
In music, the K-Pop genre has transformed over the past decade from a local phenomenon into a global entertainment industry encompassing billions of dollars. South Korean entertainment companies export music, performances, merchandise, digital content, and commercial rights all over the world, while bands like BTS, BLACKPINK, and others have established immense fan communities in Asia, Europe, the US, and the Middle East. The impact of K-Pop goes beyond the field of music alone and also promotes tourism, fashion, cosmetics, learning the Korean language, and the consumption of Korean content in general.
The global success of the genre is also reflected in the field of cinema and streaming: The animated musical film KPop Demon Hunters became the most-watched film in Netflix history, with more than 236 million views in the official measurement window of the first 91 days after its launch on the service. Concurrently, Netflix’s Squid Game series became the most-watched series in Netflix history with over 1.6 billion viewing hours in the first 28 days. The series became a global cultural phenomenon – ranging from TikTok challenges to a surge in sales of white Vans shoes.
5.
The Central Bank of South Korea is flexible and responds to changes in the economy. The bank raised the interest rate after the Coronavirus crisis and the real estate asset bubble to 3.5%, but halted further increases to prevent a collapse of contractors, and reduced the interest rate in May 2025 to 2.5% when it saw that the South Korean economy might be harmed by the US tariff policy and identified a decrease in private consumption.
Now, with the increase in growth and a growth forecast this year of 2.6% along with a rise in the inflation forecast after it already actually rose to 2.6%, the inflation forecast rose to 2.7% compared to the Central Bank’s target of 2%, and it is highly possible that there will be another rise in the interest rate. The monetary policy materializes, answers needs and developments, and the interest rate is close to the inflation rate. Certainly not like with us, where the interest rate is high in real terms and chokes the public.
