SOUTH KOREA. Lotte Duty Free is bracing itself for a hugely challenging trading period as a Chinese crackdown on travel to South Korea takes effect.
As reported, the China National Tourism Administation (CNTA) has issued a banning order prohibiting group tours to South Korea in the wake of the latter’s deployment of the US anti-missile system THAAD. The system, intended as a defence against attacks from North Korea, is perceived as a threat to Chinese security by the Mainland government.
THAAD has been deployed on land owned by Lotte Duty Free parent, Lotte Group, in the Seongju region, southeast of Seoul. That has led to a ferocious backlash against Lotte, including the hacking of group websites, a boycotting of its stores in China and a social media campaign attacking the company.
A popular Chinese pop singer, Xie Tianming, even published a song (see YouTube link below) which calls on Chinese people to boycott Lotte products. Its lyrics include the following words: “Danger is approaching us//So all Chinese people should wake up//In South Korea the US deploys THAAD//Which can monitor more than half of China//Lotte makes a lot of money in China//Yet still offers a place to the US.”
The tour crackdown took effect on Tuesday, 15 March, and a Lotte Duty Free spokesperson told The Moodie Davitt Report that while there had not been a significant impact on sales yet, the company was projecting that the “after-effect will begin to occur in earnest after this month.” Chinese tour groups are reportedly banned from selling Lotte-related products and have been told to stop issuing Chinese travel visas to South Korea from 15 May.
“When the Chinese people stand up together, it is a formidable sight” – Weibo user
While the Chinese do not need a visa to visit the popular Korean island of Jeju, the leisure destination is also feeling the heat. According to Chinese online media Shanghai List, all 3,400 passengers on Chinese cruise ship Costa Serena refused to disembark when the vessel docked in Jeju last Saturday.
Their decision not to set foot on South Korean soil was cheered on Chinese social media, the website reported. “When the Chinese people stand up together, it is a formidable sight,” wrote one Weibo user, a comment that received over 130,000 likes.
Lotte Duty Free’s sales to Chinese customers rose +23% year-on-year in January and +30% in February. For the first two weeks of March they were still up by +20% over the same period last year but in week three the gain had slipped to just +1%. Things are about to get a whole lot worse.
Footnote: Look out for this week’s edition of The Moodie Davitt e-Zine, out today, which examines the impact on travel retail of the THAAD controversy and this month’s impeachment of Koren President President Park Geun-hye.