Chinese tourist spending boosts economy

By Lee Woo-young
  • Published : Oct 8, 2014 - 21:25
  • Updated : Oct 8, 2014 - 21:52
Hundreds of Chinese tourists crammed in front of Korean cosmetics brand counters at Lotte Duty Free Shop in Eulji-ro, Seoul, on Tuesday, the last day of their “Golden Week” of holidays that marks China’s National Day.

Leaving little room to walk between the counters, female tourists indulged in the last shopping spree of their vacation.

The Chinese National Day holiday, which runs from Oct. 1-7, is a peak time for shops in popular tourist spots such as Myeong-dong, Dongdaemun and Insa-dong. Tens of thousands of Chinese visit South Korea during the weeklong holiday. The Korea Tourism Organization predicted earlier that 160,000 Chinese would visit during Golden Week, up 35 percent from the same period last year.

“The number of Chinese customers has doubled during the National Day holiday week,” said Kim Chul-in, a sales clerk at Sulwhasoo, a popular cosmetic brand with Chinese tourists, at the Lotte Duty Free Shop. “Eighty percent of our customers are Chinese. They spend about 300,000 won ($280) to 400,000 won on average per person.”

Another sales staff of the same brand at the Lotte Department Store said she sees some six to seven large groups of tourists visiting the store each day, and half of them spend 1 million won on skin care and makeup products.
The Lotte Duty Free Shop in Seoul is crowded with groups of Chinese tourists on Oct. 5, during the ‘Golden Week’ of the Chinese National Day. (Yonhap)

Lotte Department Store reported 3.7 percent increase in sales during the National Day holiday thanks to spending made by Chinese tourists. Instead of the annual fall markdown event for Koreans, the department store has been promoting a sales event only for foreign customers, mainly targeting the Chinese. The sale, which continues through Oct. 19, offers a 10-30 percent discount with an extra 10 percent off. Foreign customers can also save 8 percent with a tax refund, and receive gift certificates to lure them to shop again.

“We bought cosmetics and clothes that cost about 30,000 yuan ($4,800) in total,” said a family surnamed Caohe from Anhui Province in eastern China at the tax refund lounge at the Lotte Department Store on Tuesday. Cosmetics, clothes and bags are among the popular shopping items for Chinese tourists.

The large spending by Chinese tourists is expected to grow and make a significant contribution to the Korean economy.

According to a report by Hana Daetoo Securities, the amount Chinese tourists spent on shopping in South Korea was 6.1 trillion won in 2013, which accounted for 1.9 percent of total domestic retail spending. They expect the amount to rise fivefold to 35.3 trillion won in 2020, to make up 7.7 percent of the national total.

The number of Chinese tourists is expected to increase steadily over the next five years. The KTO estimates that some 5.8 million Chinese tourists will visit this year. The number is estimated to double to some 10 million in 2018. Chinese arrivals have already taken up 42 percent of the total arrivals in South Korea from January to July this year.

“Korea emerging as a favorable shopping destination for Chinese tourists is a great sign and a huge benefit to the country. Korea can be the next shopping mecca after Hong Kong, which draws tens of millions of tourists for shopping,” said Suh Young-choong, director of the China team at the KTO.

Improving quality

There have been concerns that the quality of travel programs is not keeping up with the increase in Chinese tourism. Cheap package deals have caused complaints about low quality accommodation, poor service from tour guides and compulsory shopping trips.

The Korea Tourism Organization has recently conducted a few model package tours as part of an effort to upgrade the quality of travel products. It invited VIP customers of a Chinese bank to a luxury tour and others to go on a golf tour that introduced them to Korea’s diverse landscape.

“What we are trying to do is to come up with new tour programs that can enhance the overall travel experience for Chinese tourists,” said Suh.

The KTO and the Seoul Metropolitan Government launched initiatives a couple years ago to upgrade tour packages by recommending examples of quality tour programs to foreign travel agencies and offering free promotions for travel agencies that improve Korean tour packages and meet their standards.

The Korean tourism industry also faces the task of diversifying the economic impact of Chinese spending by attracting Chinese tourists to different regions in the country.

Seoul and Jejudo Island are the most popular tourist destinations for Chinese tourists. The Jeju Special Self-Governing Provincial Tourism Association estimated that 90,000 Chinese tourists would visit the resort island during the National Day holiday. Chinese arrivals in Jeju reached 1.8 million in 2013 and are rising fast, according to the Jeju tourism association.

“The large influx of Chinese tourists to Seoul and Jeju have caused a shortage of accommodation in those two regions during travel peak season,” said Suh.

“The Korean provinces are not easily accessible to Chinese tourists yet. Moreover, they lack distinct features that distinguish them from other regions. We need work on uncovering the uniqueness of each region and developing them into tour products to lure more Chinese tourists.”

By Lee Woo-young (