Backlash against missile defense from China might affect Korea’s tourism

Published on : Thursday, July 14, 2016

china missliePotential recoil from China against the deployment of a missile defence system on the Korean peninsula is raising worries among South Korea’s tourism and leisure industries. This is for the fact that country depends heavily on Chinese tourists to drive sales.



South Korea and the U.S. have planned to deploy the Terminal High-Altitude Area Defense, or Thaad, system in an area about 220 kilometers (136 miles) southeast of Seoul. This decision created a stern chagrin and China’s foreign ministry declared that the system’s powerful radars threaten its national security. China also said that it would take “necessary measures to safeguard” its interests in the region.



The warning created tension through the country’s tourism and leisure industries, as it relies much  on Chinese visitors for sales, and would be hardest hit if China were to restrict or hamper travel to South Korea.



The world’s third-largest operator of duty-free stores and the biggest in South Korea, Hotel Lotte said that visitors from China accounted for 70 percent of sales at its duty-free stores in the first six months of the year. Precisely, this sums up to 62 percent in 2015 and 59 percent in 2014.



Accounting to the ‘high risks’ involved, Samsung Group’s Hotel Shilla Co., the country’s second-largest duty-free operator, also shared its tension that about 65 percent of its sales are to Chinese tourists.



While not as reliant on visitors from China, several major hotels in Seoul said that as much as a quarter of occupants are Chinese tourists.



Sharing a report, Samsung Securities estimated the 2017 operating profits of Hotel Shilla, Paradise and Grand Korea Leisure could fall 2.6 percent, 2.3 percent, and 0.8 percent, respectively, if the number of Chinese visitors were to drop by 1 percentage point. However, according to some of the travel industry experts, it is too early to comment how the country’s overall economy would be impacted since China has not taken any retaliatory action.

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