Foreign tourists spent 5.64 million won (US$4,297) and 1.43 million won on duty-free goods per capita in November 2022 and November 2023, respectively. The amount plunged by more than 70%.
The number of foreigners who visited domestic duty-free shops in November more than doubled to 646,000 from the same period last year (231,000), according to the Korea Duty Free Shops Association on Nov. 11. However, duty-free shop sales only reached 921.3 billion won, a sharp drop from 1.30 trillion won the previous year.
Inflation and the exchange rate were cited as the main reasons behind the decline in duty-free shop sales. Japanese and Chinese tourists have been visiting Korea in droves in recent years, with many of them enjoying experiential tourism rather than buying expensive duty-free goods. In fact, according to the Korea Tourism Organization, Japanese (2.12 million) and Chinese (1.77 million) made up the majority of foreign visitors to Korea through November 2023.
Among China, South Korea, and Japan, South Korea posted the largest inflation increase. In the past year, South Korea’s consumer price inflation rate has ranged from 2 to 6% year on year. During the same period, Japan’s was between 2.5 and 4% and China’s was between 1% and -1%. In particular, Japanese tourists spent less on food and beverages due to the depreciation of the Japanese yen. Chinese tourists had less spending power due to an economic downturn.
South Korea’s currency competitiveness also affected their spending. From 2019 to 2023, the Korean won appreciated by 9.7% against the Chinese yuan, while the Japanese yen appreciated by 24.3% during the same period. For example, while 1,000 won in South Korea fell from 5.9 yuan to 5.4 yuan, 100 yen went from 6.3 yuan to 5.1 yuan. This means that Chinese people had weaker spending power in South Korea.