South Korea celebrity appears in Chinese ad in subtle sign of thawing diplomatic tension

SEOUL (Reuters) - A South Korean actress is promoting cosmetics on China’s biggest online mall, in a subtle sign of easing diplomatic tension that has seen once-ubiquitous South Korean celebrities vanish from Chinese marketing campaigns.

South Korean actress Jun Ji-hyun looks at a tablet as she arrives at the 50th Baeksang Arts Awards in Seoul May 27, 2014. The arts awards is an awards ceremony for the television and film industry in South Korea. REUTERS/Kim Hong-Ji

Jun Ji-hyun, who has played the lead roles in hit movies and dramas such as 2013’s “My Love from the Star,” featured prominently on Monday on the product page of health goods maker Mentholatum on Alibaba Group Holding Ltd’s

Jun’s appearance comes toward the end of a year in which South Korea’s entertainment industry suffered a drop in Chinese demand for South Korean cultural exports. The drop came as Beijing objected to Seoul’s use of a U.S. anti-missile system, prompting popular anti-South Korean sentiment in China.

South Korean celebrities soon reported being unable to attend promotional events and having work visa applications delayed, officials at South Korean talent agencies told Reuters.

“Chinese TV ads featuring South Korean celebrities were suddenly dropped and new ones aired with Chinese celebrities,” said a director of a South Korean talent agency, declining to be identified due to the sensitivity of the matter.

Chinese foreign ministry spokesman Geng Shuang, at a regular briefing on Monday, said he was not aware of any restrictions on South Korean cultural exports, and that “China will work hard with South Korea to promote the early return to the correct and healthy track of bilateral exchanges and cooperation.”

Mentholatum’s Asia-Pacific headquarters did not have an immediate comment. Alibaba could not be immediately reached.

In late October, Beijing and Seoul agreed to move beyond their year-long stand-off over the missile issue.

“We haven’t seen any immediate tangible change, but we hope the agreement will have a positive impact on future cultural exchange,” South Korean entertainment and media firm CJ E&M Corp told Reuters.

The impact of the stand-off has been deep. K-Pop agency YG Entertainment Inc has not scheduled any concerts in China since July 2016. In its most recent earnings report, it said July-September operating profit fell 88 percent.

Peer S.M. Entertainment Co has also not scheduled a concert in China since September 2016. Its latest earnings showed a 61 percent profit drop for January-June.

But analysts expect the agreement ending the stand-off to see earnings at entertainment firms begin to recover from as soon as early 2018.

Reflecting that expectation, shares of CJ E&M rose 5.6 percent on Monday, while S.M. was up 3.9 percent and YG was 6.1 percent higher. The benchmark Kospi index fell 0.5 percent.

Reporting by Joyce Lee and Heekyong Yang; Additional reporting by Christine Kim and Ben Blanchard; Editing by Christopher Cushing