Korea duty free industry ‘too dependent’ on Chinese tourism

By Lucy Whitehouse

- Last updated on GMT

Korea duty free industry ‘too dependent’ on Chinese tourism

Related tags Korea

Korea’s duty free industry, driven by beauty sales, has been criticised by commentators for relying too heavily on Chinese consumers.

Recent figures released by retailer Lotte Hotel were scrutinised by The Korea Times in a recent report​, with the media outlet suggesting that “the fate of Korea’s duty free industry largely hinges on those coming from China​”.

The figures show that cosmetics make up the lion’s share of Lotte’s duty free operations, accounting for 58.9% of sales in the first quarter of this year, and that 70.8% of the company's overall sales came from Chinese visitors. This up from 63.3% on the previous year.

By contrast, Japanese consumers’ impact has decreased significantly in recent years, from 21.6% in 2012 to just 3% this year.

Volatile tourism

Trends in tourism across the region have been shifting in recent years, with Japanese spending having reduced considerably across the region, but with Chinese and Korean consumers more than making up for this.

Australia, for example, considers China its “most valuable” tourism market​, according to prime minister Malcolm Turnbull, while Korea has seen the launch of a cross-industry hub​ to encourage beauty tourism sales.

Although Japanese consumers are no longer spending so much abroad, within the country itself, the beauty industry is seeing sales growth from tourism​; again, visitors from China are particularly to thank for this.

Too reliant

Although China is currently making up the bulk of tourism sales for beauty across the Asia region, being too reliant on one consumer group is a dangerous state for the duty free industry to be in within Korea, according to commentators.

"It is too risky to depend on customers from one particular country,​” The Korea Times quotes an unnamed company spokesperson as saying.

The problem is that Chinese would stop coming here at anytime like when the Middle East Respiratory Syndrome (MERS) outbreak swept the country a year ago.​"

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