THAAD deployment creates uncertainty in tourism industry
By Kim Bo-eun
South Korea’s announcement Friday that it supports the U.S. deploying the Terminal High Altitude Area Defense (THAAD) battery here has created uncertainty in the domestic tourism industry, following China's strong condemnation of the move.
Tourism industry sources say the strain on diplomatic ties between the two countries could have an effect on visits by Chinese tourists to Korea, which accounts for the largest percentage among foreign tourists coming here.
These forecasts are based on former cases in which diplomatic issues exerted an influence on domestic tourism.
After former president Lee Myung-bak visited Dokdo in August 2012 and urged the Japanese emperor to apologize for the nation’s colonization of Korea, the number of Japanese tourists to Korea sharply declined, from 3.52 million in 2012 to 2.74 million in 2013.
“At the time, there were negative effects of diplomacy on tourism, as anti-Korea sentiments grew among the Japanese,” a Korea Tourism Organization (KTO) official said.
“We are currently monitoring reactions in China and will have to see how things turn out. But we are in a state of tension because if the Chinese were to stop traveling to Korea, it will deal a severe blow to the tourism industry, as the Chinese constitute around half of foreign tourists coming here.”
Chinese accounted for 47.3 percent of foreign tourists as of May, according to data from the KTO.
Reflecting such concerns, stock prices of domestic travel agencies have dropped since the government’s announcement Friday, based on forecasts that profits will decline if the relations between the two countries turn sour. Stock prices of companies in related industries, such as casino operators, have also declined.
“It is premature to conclude whether THAAD will reduce the number of Chinese visitors to Korea,” Yang Il-woo, researcher at Samsung Securities, said. “But if the number next year drops 1 percentage point from the estimated figure, the operating profits of related companies, including Hotel Shilla, Paradise and Grand Korea Leisure, may drop 2 percent.”
South Korea and the United States decided to deploy the missile defense system years after discussions started, citing security reasons amid provocations from North Korea.
China and Russia are against the move, saying the system allows South Korea to monitor their military activities, despite South Korea and the U.S.’ claims that it exists for the sole purpose of defense against the North.