China has expressed strong hostility toward the decision, saying it will be used to spy on its own military developments.

   The effective travel ban will likely hit the local tourism industry hard, which depends heavily on Chinese tourists who spend big on shopping.

   According to Incheon Tourism Organization, 4,000 employees of a Chinese company -- who had initially scheduled to come to South Korea on a reward trip in April -- suddenly canceled the visit on Friday.

   The organization also said it is unclear whether 12,000 employees of a China-based medical instrument manufacturer would arrive in South Korea on a corporate reward trip scheduled in April.

   Last year, 4,500 workers from Chinese cosmetics firm Aolan International Beauty Group toured South Korea as part of a bonus corporate trip and gathered in Incheon, a port city west of Seoul.

   Data from travel agencies showed that about 60 percent of them traveled on their own, while the rest came in package tours. Of the

60 percent of individual travelers, about half are presumed to have bought tickets through a travel agency.

   Since the ban applies to all trips sold by its travel agencies, Korea could see the number of inbound Chinese visitors slashed by half, industry sources said.

   According to the Korea Tourism Organization (KTO), 8.06 million Chinese tourists visited Korea last year, and are estimated to have spent an average of US$2,391 per person. Based on the figure, Korea could suffer a sharp drop in tourism revenue by $9.63 billion, should it lose half of its Chinese tourists. 

   "We have already seen Chinese demand for group tours shrink since the THAAD announcement. The overall growth in Chinese arrivals here has been sustained because individual travelers have increased," a travel agency official here said.

   The Ministry of Culture, Sports and Tourism convened an emergency meeting later in the day to discuss measures to cope with the situation. It has set up a team to be in charge of handling any difficulties that might be caused by Beijing's moves in the near future, the ministry said in a statement.

   As much as the tourism is under strain, the restaurant and duty-free businesses that rely heavily on Chinese visitors are also expected to suffer a blow.

   In 2016, local duty-free shops raked in 12.27 trillion won (US$10.6 billion) in sales in total, of which about 70 percent, or 8.6 trillion won, came from Chinese travelers.

   "It is too early to make any assumptions at this stage. We'll have to keep close tabs on the market," a KTO official said. (Yonhap)