Return of Chinese Tourism Proves Lackluster So Far

  • By Lee Tae-dong

    October 30, 2023 12:19

    The hoped-for return of Chinese tour groups after Beijing allowed them to visit Korea again in August has proved distinctly lackluster so far.
    This affects mainly the duty-free business, which relies to a great extent on business from Chinese travelers.
    The third-quarter operating profit of Hotel Shillas, which operates Shilla Duty Free, was down 71.7 percent on-year to W7.7 billion (US$1=W1,356). Although the hotel and leisure business fared well, the duty-free subsidiary shifted from a W600 million profit a year ago to a W16.3 billion loss.
    Shilla spent more than W30 billion on a new branch at Incheon International Airport in July, but business during China's National Day holiday break starting Oct. 1, when millions travel, was disappointing, and Chinese customer numbers remain at one-third of the level before the coronavirus pandemic.
    Lotte and Hyundai Department Store duty-free shops, which have yet to announce their third-quarter earnings, are thought to have experienced similar problems.
    Chinese tourists queue in Shilla Duty Free shop on Jeju Island in this file photo from Sept. 20.
    A travel agency staffer said, "We thought Chinese people would visit Korea in droves in September after group tours were allowed to resume in August, but planes from China are only 70 percent full."
    Those who do come spend less on overpriced tat and seem to have become more sophisticated. "In the past, Chinese tourists used to buy up the whole store, but nowadays they prefer to go to restaurants instead," a duty-free shop staffer said.
    Their per-capita spending in duty-free shops declined more than 20 percent compared to pre-pandemic times.
    Chinese people also have less money to spend now that their country's economy is slowing down. LG Household and Healthcare's third-quarter operating profit from the beauty products business plummeted 88 percent on-year to W8 billion, and the main cause was a 29-percent fall in sales in China. Many Chinese consumers are buying products made in their home country as they tighten their belts.
    As a result, expectations for China's Singles' Day shopping season around Nov. 11 are also muted.
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