In 2013, young people living in Seoul’s Gangnam district rarely ventured to Seongsu-dong, an industrial area across from the Apgujeong Hyundai and Hanyang Apartments. It was mainly a place to get cars repaired. But by the mid-2010s, Seongsu-dong had transformed into a bustling neighborhood for young people and has since become a global hotspot, drawing international visitors. The opening of Dior’s flagship store in the area marked a symbol of this dramatic shift.
How did this once overlooked district, filled with auto repair shops and decaying handmade shoe factories, evolve into a space that leads global trends?
The key to the success of both Seongsu-dong and Ikseon-dong lies in their “differentiated experiences.” Both areas have reinvented themselves, preserving their histories while adding fresh creativity and new sensibilities. For young people raised in apartment complexes, Ikseon-dong’s hanok village and Seongsu-dong’s factory-filled streets provided unique, offbeat experiences. However, Seongsu-dong had an additional advantage: the development of a strong business district preceded its rise as a trendy destination.
In 2013, two young entrepreneurs visited my office at Seoul National University. They ran an impact investment company supporting social ventures and were looking for a location where their company and potential investment targets could gather. For readers who may view social enterprises or ventures as overly ideological or disconnected from business, feel free to stop reading now. Michael Porter, the renowned global business strategist from Harvard Business School, has long argued that businesses can pursue social and environmental goals while also achieving economic profits. The belief that only profit-driven businesses are capitalist is a misconception.
At the time, I recommended both Nakseongdae and Seongsu-dong. Nakseongdae is located near the country’s top university and offers easy access to Gangnam via subway Line 2. Seongsu-dong, a semi-industrial area, offered a high floor-area ratio of up to 450% (population density being a major driver of urban growth), and crossing the Seongsu Bridge connected it directly to Gangnam’s business district. The area’s industrial character also offered a distinctive spatial experience.
The entrepreneurs chose Seongsu-dong. They set up shop in a small villa district north of Seoul Forest, which is now known as the “Seoul Forest Cafe Street.” They strategically networked with various social ventures, and as social enterprises and shared housing options began to emerge, an ecosystem started to take shape. Initially quiet, the area gradually evolved into a mixed-use district combining work and leisure. Seongsu-dong became a real-world example of Porter’s “Creating Shared Value” concept.
A prime example of shared value creation is Nestlé, the world’s largest food company. In the 1960s, Nestlé faced dairy supply challenges in the Moga region of India, where farmers were impoverished, veterinarians were scarce, and refrigeration systems were nonexistent. Nestlé began improving the community’s conditions by educating farmers in dairy farming, providing veterinary support, building refrigeration infrastructure, and managing feed. This resulted in higher milk quality, stable supplies, and the creation of related industries such as feed suppliers, transportation, and equipment services. Nestlé strengthened its competitiveness while improving farmers’ income and quality of life, becoming a key driver of the local economy.
Seongsu-dong has experienced similarly impressive growth. In the early 2010s, financial companies investing in social ventures began moving in, attracting quality social ventures and enterprises. Other related businesses followed, and as young workers flocked to the area, cafes, restaurants, and clothing stores opened, transforming Seongsu-dong into a vibrant destination. As an investment ecosystem developed, the area continued to grow. Today, large companies like Musinsa, SM Entertainment, Hyundai Glovis, and cosmetics and beauty firms are establishing their presence, turning Seongsu-dong into a new business district.
While hotspots can be created when a few investors inject content and market it to generate short-term growth, the organic formation of a business district cluster—especially in a large city like Seoul—is a different story. When a company moves its office from Gangnam to Seongsu-dong, it’s not simply due to lower rent, but because of the potential for interaction within a functional ecosystem. Seongsu-dong became a true cluster because it met these needs.
Returning to the core question: What makes Seoul competitive? If abandoned factories and empty streets had been demolished to make way for large-scale apartment complexes, today’s Seongsu-dong would not exist. It’s vital to think about what functions a city needs, which organizations will operate them, and the strategies for attracting them. Simply building structures and assuming people will naturally come is a misguided fantasy.
Seongsu-dong’s transformation has been the result of balancing preservation and development. Some buildings were redeveloped into towering new structures, while others retained their original warehouse and factory facades but innovated their interiors. This shift was possible because of the presence of a new social venture ecosystem, capable organizations, and talented individuals. What once seemed like a district to be demolished has now been redefined by young entrepreneurs and their networks, reshaping the city’s future.
