South Korea Aims to Woo Back Chinese Shoppers After MERS-Led Summer Slump

A Chinese tourist takes a selfie at Gyeongbokgung Palace in Seoul, South Korea. (Jing Daily)

A Chinese tourist takes a selfie at Gyeongbokgung Palace in Seoul, South Korea. (Jing Daily)

As the most-visited foreign country for outbound mainland Chinese tourists, South Korea’s tourism industry was on a roll early this year as it lured shoppers away from Hong Kong—until the MERS crisis hit in June and dented visitor numbers. Now—with help from South Korean retailers—the country is on the rebound path with hopes of winning back lost Chinese revenue.

With fast, easy flights to and from mainland China, a thriving retail scene with lower luxury prices and abundant duty-free goods, and high consumer trust in product safety and quality, South Korea was quickly gaining Chinese tourist-shoppers as they avoided Hong Kong in the first half of this year. The country was the number one destination for Chinese New Year travelers from mainland China in February, while Korean department stores saw sales growth rates ranging from 27.7 to 74.9 percent during the period.

Then, the MERS crisis hit in June and caused an estimated 80 percent drop in Chinese tourist numbers over the summer that cost South Korea around US$93 million. Although Hong Kong is still seeing a slump, a growing number of Chinese tourists opted to visit Japan instead as a depreciating yen lured shoppers.

South Korea is adopting several new measures in order to encourage returning Chinese visitors. In July, the South Korean government announced that it will be waiving a visa fee for Chinese visitors through September 30, and automatically extending visas issued between March 1 and June 30 by six months. In addition, the Korean Tourism Organization (KTO) launched a themed program in conjunction with Wanda Tourism and Ly.com aimed at attracting 100,000 Chinese tourists. In August, Seoul’s mayor embarked on a four-day promotional campaign in China that included a K-pop flash mob in Guangzhou. Starting next April, South Korea will be giving a 10 percent refund for plastic surgery—which is a growing reason for Chinese visits to the country.

Retailers are also getting in on the plans to create a China market rebound. South Korean duty-free retail giant Lotte Group plans to attract 50,000 Chinese travelers with a comprehensive marketing plan that includes holding special K-pop concerts, parties, and raffle events to win luxury cars for Chinese customers. The company also launched a new Chinese mobile app on August 19 that features China-specific product listings and Chinese payment options. Korean duty-free competitor Shilla is also in strong pursuit of the Chinese market after recently inking a deal with Alibaba that allows shoppers to order goods on Tmall and pick them up in South Korean airport shops.

Like health crises such as MERS, political tensions and worries about safety—which were a major factor in driving Chinese tourists away from Hong Kong this year—pose a threat to the tourism industry in South Korean and throughout Asia. Although South Korea is in a much better position politically vis-à-vis China than Japan, which saw a major tourism slump in 2012 due to Chinese boycotts and chilly China-Japan diplomatic relations, its ongoing tensions with North Korea may play a role in keeping visitors at bay. Over the past week, the two countries came dangerously close to an “imminent confrontation” with the exchange of artillery fire across the DMZ before high-level officials reached an agreement to calm the situation.

If hostilities don’t resume, South Korea could gain some Chinese tourist traffic due to political issues going on with other Asian destinations. It may win back some visitors from Japan if anti-Japan sentiment rises over over Japanese Prime Minister Shinzo Abe’s (unsurprising) decision to sit out China’s September 3 military parade celebrating the WWII victory anniversary. Meanwhile, the recent bombing of the Erawan Shrine in Bangkok is likely to deter Chinese tourists from Thailand, which had been staging its own rebound this year after a Chinese tourist slump due to political unrest.

One factor that has tourism destinations across the globe worried, however, is the fate of the Chinese outbound travel market after China’s recent yuan devaluation. Experts believe it is likely to cramp travel spending—especially among the price-conscious middle class that tends to flock to South Korea. This is an issue that all countries, from France to Japan, will be grappling with in the coming months, making marketing efforts that resonate with Chinese tourists even more important than before in this complicated environment.

 

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