Will It Stir Emotions Against the Spread of Anti-China Sentiment?...Distribution Industry on Edge

Will COVID-19 Cause Double Hardship for the Industry?
Concerns Over Repetition of THAAD Incident

[Asia Economy Reporter Jeon Jin-young] Amid rising anti-China sentiment in South Korea due to the 2022 Beijing Winter Olympics Hanbok controversy and biased judgments in short track speed skating events, the distribution industry is anxious that this atmosphere might provoke anti-Korean sentiment within China. There are concerns that the industry, already struggling due to COVID-19, could face a double burden.

According to related industries on the 9th, the most tense sector is the duty-free industry. The duty-free industry fears a recurrence of the 2017 THAAD (Terminal High Altitude Area Defense) crisis. In 2017, the number of Chinese tourists was 4.17 million, which was 51.7% of the 2016 figure, and Lotte Duty Free recorded an operating profit of 2.5 billion KRW, a 99% drop compared to the previous year.

A duty-free industry official said, "Currently, individual travelers are unable to come, so the impact is not immediately felt," but added, "Since the Cold War with China has not been resolved since THAAD, there are concerns that this current situation might continue until the end of COVID-19."

Amorepacific, which is focusing on the Chinese cosmetics market, is also closely monitoring the situation. Overseas sales of Amorepacific accounted for 39.4% of total sales last year, with over 70% of that coming from China. Amorepacific has experienced sluggish sales due to the closure of Innisfree stores in China last year, intensified competition with overseas luxury brands in the Chinese luxury segment, and weakened consumer sentiment due to COVID-19. However, the company plans to increase profitability by launching a new high-end ‘Amorepacific’ brand within this year, focusing on premium cosmetics. There are concerns that if the Winter Olympics controversy escalates into anti-Korean sentiment, this plan could be disrupted.

The food industry is also in a precarious position. In the case of Orion, about half of its total sales come from China. In 2020, sales from the Chinese market accounted for 49.2% of total sales, amounting to 1.0976 trillion KRW. Orion operates Chinese subsidiaries and factories and hires mostly local employees except for key management positions. In this situation, deterioration of relations with China inevitably poses a negative factor.

This content was produced with the assistance of AI translation services.