August 25, 2017 11:31
Duty-free sales in Korea have increased despite a Chinese tourism boycott, not least because individual Chinese traders kept traveling back and forth to snap up low-priced goods.
According to the Korea Duty-Free Shops Association on Thursday, the number of foreign visitors to domestic duty-free shops stood at 1.06 million in July, down a staggering 45 percent from a year earlier.
The number of Chinese tourists to Korea declined 69 percent in July on-year. But purchases by foreigners amounted to US$693.71 million, up nine percent on-year.
Industry insiders say Chinese traders are taking advantage of the boycott that stops Chinese tour groups from shopping here and buying as many duty-free goods as they can here to sell them on at home.
Lotte, the country's largest duty-free operator, said purchases by foreigners fell to $500 million in April but bounced back to nearly $700 million last month. Each foreign customer spent about $655 in July, nearly double the $333 a year earlier.
But profitability has worsened because duty-free shops have had to offer massive discounts to lure customers since the boycott started. Lotte posted an operating profit of just W7.4 billion in the first half of this year, down a whopping 97 percent on-year (US$1=W1,129).
It recorded an operating profit of W37.2 billion in the first three months, before the boycott bit, but suffered a loss of W29.8 billion in the second quarter.
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