China’s economic bombardment in retaliation for Korea’s decision to deploy Terminal High Altitude Area Defense (THAAD) U.S. antimissile system sent tremors to the Korean tourism industry as it heavily relies on Chinese tourists for revenue.
According to the Korea Duty Free Shops Association Friday, Chinese nationals made up the lion’s share of $6.75 billion from the $7.6 billion duty-free spending by foreign passport holders last year.
If Chinese stop coming after Beijing’s sanction, contribution from Chinese visitors could as much as halve from last year.
According to industry sources, the Chinese tourism authority has issued a verbal command to travel agencies in Beijing to stop organizing group and individual trips to Korea. The state mandate could spread to other cities in China.
The move will also rock the lodging industry.
Sejong Hotel in downtown shopping district Myeongdong saw booking ratio by Chinese slip to 20 percent to 30 percent recently from average 40 percent.
“The problem is we do not have substitutes for Chinese guests,” a hotel staff said.
Korean beauty care products that are top grabs by Chinese visitors also would feel the squeeze. Chinese travelers account for 80 percent of cosmetics sales at duty free stores.
Korea’s largest cosmetics maker Amorepacific Corp. earned 1.47 trillion won ($1.3 billion) from duty-free sales, taking up 22 percent of its total revenue. Without the Chinese, its duty-free revenue could plunge to 800 billion won level. LG Household & Health Care Ltd. whose revenue at duty-free stores made up 16 percent, or 975.6 billion won last year, may also see dent in its income.
By Kim Yoo-tae and Park Eun-jin
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]