A deepening crisis: Chinese arrivals to South Korea fall -64.1% in May

kto

SOUTH KOREA. The dramatic drop in Chinese visitors to South Korea continued in May – with a -64.1% year-on-year decrease, according to Korea Tourism Organization statistics.

The decline is being driven by the THAAD dispute between South Korea and China. As reported, South Korea’s decision to deploy the US defence system infuriated the Chinese government and led to a massive backlash against Korean companies.

The tourism and travel retail sectors, heavily dependent on Chinese visitors, have been among the worst-affected.

On 15 March China imposed a ban on group tours to South Korea, leading to a -40% year-on-year fall in Chinese arrivals in March, a calamitous -66.6% decline in April, and now the most recently reported May slump. The number of Chinese group tourists in May collapsed by -71.9% to 172,527.

Chinese arrivals reached just 253,359 for May, representing 25.9% of total visitors, compared with 705,844 in May 2016, a 47.3% share. For the first five months of 2017, Chinese arrivals decreased by -34.7% to 1,997,985.

More positively, Korean departures were up +21.0% to 2,003,834 in May. For the first five months of 2017, departures climbed +18.9% to 10,522,636.

Selected visitor arrivals by gender for May; Source: Korea Tourism Organization (click on tables to enlarge)
Selected visitor arrivals by gender for first five months; Source: Korea Tourism Organization
Selected visitor arrivals by purpose for May; Source: Korea Tourism Organization
Selective visitor arrivals by purpose for first five months; Source: Korea Tourism Organization
Selective visitor arrivals by age for May; Source: Korea Tourism Organization
Selected visitor arrivals by age for first five months; Source: Korea Tourism Organization
Korean departures January to May; Source: Korea Tourism Organization

As reported, South Korean tourism and travel retail executives are still hopeful that the election of new Korean President Moon Jae-in will lead to a rapid improvement in relations with China. Before the election, Moon pledged a much softer line on THAAD and on relations with North Korea than his predecessor, the now disgraced Park Geun-hye.

South Korean travel retailers have been targeting other nationalities, particularly Japanese and Korean nationals, to help offset the slump in Chinese spending (estimated at around 65-70% of the Korean travel retail market last year).

But Japanese arrivals fell -10.8% in May to 159,379, for a 16.3% share of the total. In better news, visitors from Taiwan were up +13.0%, for a 7.5% share.

Lotte Duty Free recently announced a number of measures to combat the lost business as a result of the THAAD crisis, with over 40 executives returning 10% of their salary. The company also opened its new-look World Tower store in Jamsil, Seoul today (30 June), the country’s largest duty free shop.

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