According to a report from the South China Morning Post, South Korea’s decision to install the US THAAD missile shield to defend itself against the threat of a North Korean attack caused China to retaliate in March by banning sale of package tours to the country, among other measures.
In the January to July period, the number of Chinese visitors to South Korea fell by 20.9%. Meanwhile, Chinese tourists acquired an enhanced taste for travel, with outbound tourism growing by 5.1% at the same time.
Oliver Matthew, head of Asia consumer research at CLSA told the Post that “the longer the THAAD issue continues, the more challenging it is for Korean companies to make their plans targeting Chinese consumers”.
However, Matthew continued, CLSA’s surveys show that the cosmetics space has been largely untouched as Chinese consumers are expected to spend more on cosmetics; “Korean brands offer differentiation and will still succeed regardless of politics.”
While individual tourists can organise their own travel to South Korea, no group holidays are being sold. A member of staff at the state-run China Travel Service said “no agency would want to do any package deal business.”
Golden Week begins on the 1st October and will last for eight days. Earlier this month, the Shanghai-based travel agency Ctrip.com estimated that six million Chinese tourists will travel abroad this year, one of the largest human migrations not caused by war. In the same period last year, 589 million people travelled both internally and externally.
Meanwhile , crippling measures imposed by Beijing on South Korean business have caused some of the country's largest companies to scale down their Chinese operations. Retailer Lotte, for example, has announced it will sell a number of its Chinese stores with the possibility of withdrawing from the country completely.
Around 80% of Lotte’s total of 112 stores have been closed for six months, in part because of consumer boycotts, in part because of tighter safety and sanitary inspections, with the company losing hundreds of millions of yuan as a result.
Data sourced from South China Morning Post, Straits Times, Channel News Asia; additional content by WARC staff