Chinese Tourists Not Visiting Korea, Duty-Free Industry Faces Challenges

Chinese National Day Holiday Duty-Free Sales Decline
Daigou Sales Drop and Fewer Yooker Inflows Than Expected

High Inflation Impact... "Burden of Travel Expenses to Korea"

On the 11th, a duty-free shop in Seoul appeared quiet due to the sparse visits of Chinese tourists. Photo by Jo Yongjun jun21@

A duty-free shop in downtown Seoul during the Hangul Day holiday. Unlike the bustling outdoor scenes filled with outing visitors during the 3-day holiday, it was quiet inside. Contrary to the news that Chinese group tourists (Youke) flock to visit Korea around the Chinese National Day holiday (September 29 to October 6), it was difficult to find individual Chinese tourists. Although there were staff members who could speak Chinese stationed at the luxury brand hall, only some of them were attending to visitors. A luxury store official explained, "It is like this except when Chinese group tourists come in," adding, "We are running holiday promotions, but due to the high exchange rate, domestic customers have also decreased."

On the 11th, a duty-free shop in Seoul appeared quiet with few Chinese tourists visiting. Photo by Jo Yongjun jun21@

The duty-free industry, which was buoyed by expectations of a boom during the Chinese National Day holiday, has been cast into shadow. When the visit of Youke to Korea was allowed two months ago, the duty-free industry expected the National Day holiday, considered a golden holiday in China, to be a turning point to revive the domestic duty-free market atmosphere. It was the first time in 6 years and 5 months since the THAAD (Terminal High Altitude Area Defense) incident in March 2017 that Chinese group tours to Korea resumed, raising high expectations. A turnaround in performance in the second half of this year was also anticipated with the influx of Youke, but it turned out that the inflow of Youke during this period was not significant.

According to the duty-free industry on the 11th, Lotte Duty Free's total sales to Chinese customers from the 1st to the 10th decreased by 50% compared to the same period immediately before (September 21?30). The biggest reason was the decline in sales from Chinese daigou (personal shoppers) due to the industry's efforts to normalize commission fees this year. Sales from Youke alone increased by about 45%, but it was still not enough to offset the absolute decrease in daigou sales in the duty-free store revenue. A duty-free store official said, "Since the average spending per daigou customer is very high, Youke would have to come at pre-THAAD levels to cover that sales gap," adding, "Youke are not coming in as much as initially expected, so we need to watch the situation closely until the first half of next year."

The industry pointed to economic uncertainty in China as the biggest reason for the delayed return of Youke. According to Bloomberg, a survey targeting China's middle class showed that one-third of respondents said their willingness to travel abroad has decreased recently due to the economic downturn and political situation.

High inflation is also causing Youke to hesitate. In the past, competition to attract Youke was fierce, and the retail industry launched low-priced travel products even at a loss, but now it is not easy to produce products as cheap as before. With more hotels closed during the COVID-19 period, accommodation costs have also risen compared to before. Earlier last month, Chinese travel industry officials conveyed to domestic duty-free shops that food, transportation, and accommodation costs were higher in Korea than in Japan during their visits.

Some argue that instead of waiting for the return of Youke, the duty-free industry should prepare self-help measures such as developing killer content. Trying to make money with monotonous shopping items at a time when interest in K-content like BTS and Blackpink is high does not align with tourism trends. Another duty-free industry official pointed out, "Just as Koreans frequently visit Japan, we need to develop content that encourages Chinese people to visit Korea often," adding, "Duty-free shops also need to work closely in line with these tourism patterns."

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