I studied East Asian Studies in College, and have attended a Korean pastored church for the past 8 years. Right now I am serving as a missionary in Tokyo, Japan. In January I'll be attending graduate school at Wheaton college studying intercultural studies.
I'll try to give the history of Protestant Christianity in Korea in a nutshell.
In the 1880's and 1890's the first Protestant missionaries came to Korea. They were quick to establish churches, schools, hospitals, universities and other social institutions. Pyongyang quickly became the most protestant Christian city in East Asia, some people referred to it as the Jerusalem of the East. There was a definite move of the Holy Spirit as people turned away from animism, ancestor worship and Confucianism towards Jesus.
At the time when the Protestant missionaries came to Korea, less than 10% of the population was literate. In order to teach the bible, the missionaries taught the Koreans how to read and write an obscure Korean alphabet previously only used for court short-hand called hangul. They published the bible and Christian literature in hangul and began to teach people how to read using Christian resources -people were eager to learn to read and many responded to the message of the Gospel -today South Korea is one of the most literate countries in the world, due in large part to the efforts of Western Protestant missionaries.
In 1910 Japan annexed Korea as a colony. They began to assimilate the Korean people into the Japanese culture. They forced Koreans to learn Japanese, read and write Japanese, they made them take Japanese names and dress in Japanese cloths. They closed down mission schools and discouraged the promulgation of Korea culture and heritage. They forced Koreans, even Korean Christians to worship at Shinto Shrines, worshiping the Japanese emperor. The Japanese were forcibly trying to eradicate any Korean self identity.
Since Korea's colonizers were other Asians, they saw Western ideologies as their potential liberators. North Koreans were generally more favorable towards Christianity and Democracy, while South Koreans, where most of the factories in Korea were at the time, were more favored towards Communism, which offered a similar promise of freedom and liberation from the Japanese empire.
Many Koreans became Christians out of political or social motivation, because the Christian world view affirmed their cultural identity -there was a strong movement of Christian nationalism.
After World War II, Russia took the surrender of Japanese forces in the North of Korea, and the USA took the surrender in the South. Huge populations of Koreans moved either north or south depending on their ideological background. The Christians from Pyongyang mostly settled in Seoul, and South Korean communists mostly moved North. After the Korean war, it became impossible for any straggling North Korean Christians to head south, and they became terribly persecuted.
South Korean Christianity is a mixed bag. There are some very powerfully annointed South Korean believers in Christ. However there is also a lot of cultural Christianity.
Korean culture USED to be very conservative due to Confucianisms teachings. People who were traditionally conservative became Christians, and Confucianism got smuggled into Christianity. The strict social hierarchies of the Confucian world view were very similar to those within the Roman Catholic and Presbyterian churches, which is why these two churches represent the majority of Christians in Korea (if you consider Catholics to be genuine Christians or not is not part of this topic).
In addition to the smuggling of Confucianism into Christianity has also been the smuggling of some issues of Korean self-identity stemming from something they call 'Han.' Which means an inner-anger, or struggle. All Korean people have this 'Han,' which is actually just a ethnic/national victim complex. Sometimes the 'Han' can be perceived as good, such as when they were cheering for the world cup in Korea in 2002, sometimes it is used for bad, because frankly, Koreans can be some of the most racist people in the world.
Strict Confucian hierarchy and ethics translate into strict legalistic and cold churches that do not preach the grace of Christ, but instead conformity to community. Nationalistic Korean Christian converts translate into cultural Christians, who see church as a place to socialize and build community rather than worship God. Korean 'Han' translates into a victim complex, which makes Koreans more sympathetic to the Jewish people in the Old Testament than to the gospel of Jesus Christ.
In addition to this, there are two other major factors at play in the church in Korea in the last 30 years. Cults and the Prosperity Gospel have been very influencial in the Korean Christianity in the past few decades. The Moonies, the Jesus Morning Star Cult, University Bible Fellowship... these cults and authoritarian churches don't just have a lot of direct control over Korean believers, but many other churches have unknowingly absorbed their teachings and tactics and are in turn abusing their congregations.
The Full Gospel Church of Yoido Island used to be the largest church in the world. They are a Pentecostal mega-church that preaches the Prosperity Gospel, they have a lot of influence on the current trends of Christianity in Korea.
Besides Cults and the Prosperity Gospel, there is also the tendency towards church splits in traditional mainline denominations, especially the Presbyterian church. There are over 1000 distinct Presbyterian denominations in Korea, and countless churches underneath them, and they are frantically cell-dividing. Partly it is because of he emphasis on Confucian hierarchy -everyone wants to be a leader, and no one wants to be under the leadership of anyone else, so when a disagreement happens, the church splits. It can split over anything, the color of the Pastor's suit, which songs to sing from the Hymnal, although usually over personality conflicts within the congregation... sometimes even over doctrine =)
Korean culture is changing, especially among the youth. Due in part to all of these factors, Christianity spread in Korea like a wildfire. But in the last several years there has been a distinct downturn in church growth. Protestant churches are shrinking! There are several reasons.
One reason is that young people hate all the Confucianism. They've grown up watching western TV shows which affirm an Individualistic, Post-Modern world view which doesn't jive with the traditional Korean conservative ethic. Young people are more interested in 'experiencing spirituality' than going to church -much like the youth in the United States. And with how bad the churches in Korea are, I can't blame them.
All the problems in the church, with cults, personality conflicts, lots and lots of legalism... the older generations are just fed up with it. People are tired of looking for a church that doesn't make them feel horrible on Sunday (not because they are sinners, like some American believers, but because the church is actually horrible). So older people are leaving the churches in droves as well.
Recently there was a big incident regarding the Short Term Korean missionaries captured in Afghanistan. This incident promulgated a lot of anti-Christian sentiment, and brought a lot of these long standing complaints to the surface. Just about everyone, including the media, got into Christian bashing -lets face it, Korean Christians are easy targets. For the most part, to be honest, Koreans are really bad missionaries too -they try to set up their own little kingdoms instead of building up the Kingdom of Christ.
It used to be said that when you flew over Seoul at night it used to look like a Neon grave-yard -because Korean churches used to all have red neon crosses on top. Unfortunately, it doesn't just look like a graveyard anymore, it is. Korean Christianity has some very serious ailments, it is sick at its core. Korea needs genuine revival. It needs to purge itself of all of the Confucianism, cultishness, prosperity gospel, Korean-nationalism/racism/victim-complex and cultural-Christianity and get back to real biblical Christianity!
Thats the nut-shell, I guess its more like a coconut!