919,937 Mainland Chinese Tourists Visited South Korea In 1H 2011
In response to complaints by foreign tourists that duty-free shops in Seoul and other South Korean tourism hotspots are overly crowded with domestic shoppers, last week the Korean government announced plans to launch new “foreigner-only” duty free shops in 2012 — a move that many be attributed to a growing number of free-spending Chinese tourist-shoppers. As Jing Daily wrote last year, South Korean retailers, particularly in the cosmetics and luxury segments, have seen Chinese tourists become some of their best customers in recent years, with some malls recording mainland Chinese outspending Japanese tourists two-to-one. In a report released last fall, the official Korea Tourism Organization noted that Chinese tourists outspend Japanese in general in South Korea, with the former spending US$1,547 each on average, compared to the $1,084 each by the latter. In the wake of last year’s diplomatic spat over disputed islands claimed by both China and Japan, and this year’s earthquake and tsunami, South Korea recorded 919,937 mainland Chinese arrivals in the first six months of 2011, an increase of 11.5 percent year-over-year.
While still outnumbered by the 1,395,614 Japanese tourists who traveled to South Korea over the same period, it’s important to note that Japanese arrivals showed a 4.3 percent decrease year-over-year, primarily due to the natural disasters there this spring.
Considering the double-digit growth in Chinese tourist arrivals, and their notorious appetite for duty-free high-end shopping in Korea, it’s not surprising the South Korean government singled them out as a deciding factor in its decision to instate the “foreigner-only” duty free shops. As Park Sang-deok, a customs agency official, told the Korea Herald last week, calls to create this type of specialized store came not only from retailers in Seoul, but even in far-flung resort areas. Said Park, ”Local governments and individuals have also requested to approve the operation of duty free shops as they have a growing number of foreign travelers, especially those from China.”
Despite optimism that these duty free shops will open for business at some point next year, not everyone is convinced they’ll be as much a success as the Korean government hopes. As the Korea Herald pointed out, major duty free retailers expressed doubts about marketability, with one unnamed exec saying,”The new plan, in principle, would offer more shopping opportunity for foreign travelers and make them spend more here. However, potential bidders should carefully gauge the profitability of the business.” The executive also added that he felt the impact of the new plan within the industry would be very limited. Still, even if the planned foreigner-focused duty free shops fail to materialize in one form, they may appear in another. As Shilla Duty Free Executive Vice President Jason Cha told The Moodie Report earlier this week, he is certain ”that the Korean Government will try to do something to get more Chinese travelers for duty free shopping in Korea.”