Prolonged Retaliation
The Korea Tourism Organization announced on July 9 that 841,952 Chinese visited South Korea between March and May this year, when the Chinese government banned travel to South Korea. For reference, the number of Chinese visiting South Korea amounted to 1,989,833 from March to May last year.
South Korean duty-free shops took a direct hit during the period. For example, Lotte Duty Free’s sales from Chinese customers fell 35% or 350 billion won between mid-March and the end of last month. Likewise, Hanwha Galleria’s sales dropped by 30% to 35% and this company recently shut down its shop at the Jeju International Airport. According to industry sources, the economic retaliation from China that has followed THAAD deployment in South Korea has resulted in a loss of approximately 600 billion won on the part of local duty free shops.
In the meantime, Lotte Mart’s business in China is in the face of a daunting challenge as well. It has a total of 112 stores in China and no less than 87 have been closed so far to cause a loss of approximately 400 billion won.
In the hotel industry, booking dropped by 30% year on year in Lotte Hotel alone between March and May. Things are even worse for smaller hotels. Many of them are on the brink of closure with their vacancy exceeding 90%.