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Bloomberg

A potential backlash from China against the deployment of a missile defence system on the Korean peninsula has South Korea’s tourism and leisure industries concerned, as they increasingly rely on Chinese tourists to drive sales.
South Korea and the US plan to deploy the Terminal High-Altitude Area Defence, or THAAD, system in an area about 220km southeast of Seoul, to supposedly protect the country from North Korea.
Chinese shoppers in South Korea shunning luxury brands like Louis Vuitton in favour of local goods, data suggests
The decision drew a stern rebuke from China’s foreign ministry, which said the system’s powerful radars threaten its national security and warned it would take “necessary measures to safeguard” its interests in the region.

The warning sent chills through the country’s tourism and leisure industries, which heavily depend on Chinese visitors for sales, and would be hardest hit if China were to restrict or hamper travel to South Korea.
In 2013, South Korean President Park Geun-hye said tourism was a new growth industry for the country and Seoul began easing visa restrictions for Chinese citizens, particularly those from Beijing and Shanghai, to boost the number of tourists from mainland China.
The following year, the South Korean government approved the construction of its first foreign-owned casino, as the country tries to emulate Macau and Singapore in attracting more mainland Chinese gamblers.
Seoul says its aim is to draw 10 million visitors a year from mainland China by 2020 – more than double the 4.3 million figure for 2013.
It’s a huge risk factor for us if China retaliates because of the THAAD deployment
Anonymous South Korean tourism industry official
But with the decision to accept THAAD missile systems on South Korean soil, Park could be shooting down her own grand plan, according to the duty free industry at least.
Hotel Lotte, the world’s third largest operator of duty free shops and the biggest in South Korea, said visitors from China accounted for 70 per cent of its duty free sales in the first six months of the year. That’s up from 62 per cent in 2015 and 59 per cent in 2014.
Samsung Group’s Hotel Shilla, the country’s second largest duty free operator, said about 65 per cent of its sales are to Chinese tourists. While not as reliant on visitors from China, several major hotels in Seoul said as much as a quarter of their occupants are Chinese tourists.
“It’s a huge risk factor for us if China retaliates because of the THAAD deployment,” said a duty free industry official, who did not want his name used since he was not authorised to speak on the matter.
In a report on the leisure industry, Samsung Securities estimated the 2017 operating profits of Hotel Shilla, Paradise and Grand Korea Leisure could fall 2.6 per cent, 2.3 per cent, and 0.8 per cent, respectively, if the number of Chinese visitors were to drop by 1 percentage point.
Several economists said it was too early to say how the country’s overall economy would be affected since China has not taken any retaliatory action.

“The entire economy can go bad but it’s also possible that only certain industries or companies will be affected,” said Cho Seong-hoon, an economics professor at Yonsei University.
Meanwhile, north of the border, Pyongyang has decided to start allowing Chinese tourists on half-day tours to visit without a passport.
The passport-free visits, which began on Saturday, allow Chinese tourists to travel from the border city of Dandong to the North Korean city of Sinuju, within a “designated zone” of 30,000 square metres, Xinhua news agency reported on Monday.
S Korea approves foreign-owned casino to lure Chinese tourists
The tourists must travel on a particular tourism package costing 350 yuan (US$52). The manager of the Chinese tour company arranging the trips said the zone would grow to 130,000 square metres in the future to accommodate more tourists.
About 10,000 Chinese tourists to North Korea from Dandong every day during peak times, Xinhua said.


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Chinese tourists

Could Chinese anger over US missile deployment bring down South Korea’s tourism industry?

Travellers queueing up at check-in counters at Shanghai’s Hongqiao Airport. There are fears in Seoul that fewer of them will be heading towards South Korea. Photo: Bloomberg

This US Department of Defense/Missile Defense Agency handout photo shows a terminal High Altitude Area Defense (THAAD) interceptor launching from a THAAD battery located on Wake Island, during Flight Test Operational (FTO)-02 Event 2a, conducted on November 1, 2015. During the test, the THAAD system successfully intercepted two air-launched ballistic missile targets. / AFP PHOTO / DoD / Ben Listerman / RESTRICTED TO EDITORIAL USE - MANDATORY CREDIT "AFP PHOTO / DoD / Missile Defense Agency / Ben Listerman" - NO MARKETING NO ADVERTISING CAMPAIGNS - DISTRIBUTED AS A SERVICE TO CLIENTS

Passengers leave the Chinese cruise Henna for Jeju airport, South Korea, Sunday, Sept. 15, 2013. Passengers on Sunday began leaving the Chinese luxury cruise liner that has been stuck in South Korea for the past two days because of a legal dispute. More than 2,300 passengers and crew members were stranded when a South Korean district court ordered the ship detained in the port of Jeju on Friday. (AP Photon/Yonhap, Kim Ho-chun) KOREA OUT

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