Foreign travelers carry their luggage around the shopping district of Myeong-dong in downtown Seoul, Nov. 6. Yonhap
Three months have passed since China lifted its ban on group tours to Korea, but the economic effects of Chinese tourists, formerly seen as big spenders traveling in large groups, are failing to meet the industry’s hopes of market revitalization.
The decrease is due to the new travel trend, where Chinese tourists now prefer solo travel or small group travel over big group tours and seek themed itineraries, according to tourism experts.
According to the Korea Tourism Organization’s statistics, the number of Chinese travelers to Korea amounted to 523,599 between August and September this year, which is almost a nine-fold increase from last year’s 59,779 figure from the same period.
The sudden jump in the figure is due to the Chinese government’s lifting of the ban on group tours to Korea, caused by frayed relations following the deployment of a U.S. missile defense system here.
The ban ended in August, raising hopes of a post-pandemic return of Chinese group tours, which previously accounted for the lion’s share of inbound tourists and industry sales.
Despite the dramatic increase in the number of tourists, the economic effects are failing to meet expectations. According to the data by the Korean Duty Free Association, the turnover from foreign travelers buying duty-free products mounted to 1.08 trillion won ($ 1,385 million) in September this year, which is 34.6 percent less than 1.65 trillion won from the same period last year.
The Shilla Duty Free Shop, one of the key players in the country’s duty-free market, also said it saw a 16.3 billion won loss in the third quarter this year, while LG Household and Health Care and AmorePacific both saw their operating profits down 32.4 percent and 8.2 percent, respectively.
Meanwhile, supermarkets and convenience stores, which had been overlooked as Chinese tourists’ main venues of spending, saw growing sales.
According to BC Institute of Innovative Finance’s latest analysis, the share of duty-free shopping in charge card sales from Chinese travelers in Korea nearly halved to 35.9 percent from 2019’s 63.1 percent as of September this year.
Card sales from supermarkets, on the other hand, saw a dramatic jump from 1.3 percent to 3.8 percent in the same period, while card sales at convenience stores also increased from 1.1 percent to 1.5 percent.
The data reflects the changing trend among young Chinese tourists to prefer independent traveling over group tours, which tend to include shopping programs at duty free and department stores, according to the report and tourism experts.
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