Korea's retail sector sees potential upside in China-Japan tensions as tourist spending surges

Across Korea’s retail sector, businesses see a potential upside in the deepening friction between China and Japan.

A Chinese tourist livestreams Korean products at Olive Young in Hongdae, western Seoul, on Nov. 21. [NOH YU-RIM]

At Seoul’s Olive Young Hongdae Town store on Nov. 21, the scene felt familiar: aisles packed with visitors, snippets of Japanese and Chinese drifting between bursts of K-pop, and a Chinese tourist broadcasting a live video while testing private-label cosmetics.

For many travelers from Japan, Korea now feels like the easier choice. A Japanese tourist, who introduced herself as Yuki, said she visits Korea five to 10 times a year.

“China’s hostility toward Japan has made travel there feel unsafe,” Yuki said. “Korea is different. I can come often and feel comfortable.”

Across Korea’s retail sector, businesses see a potential upside in the deepening friction between China and Japan. Diplomatic tensions intensified after Japanese Prime Minister Sanae Takaichi suggested early this month that Japan’s Self-Defense Forces could intervene in a Taiwan crisis. China’s Ministry of Culture and Tourism soon urged Chinese citizens to avoid traveling to or studying in Japan, prompting a wave of flight cancellations. Japan, meanwhile, has seen online calls to avoid travel to China grow.

Much of the industry’s focus is on a single trend: the vast pool of Chinese travelers who usually flock to Japan. According to the Japan National Tourism Organization, 6.06 million Chinese tourists visited Japan last year, spending roughly 1.7 trillion yen ($10.9 billion). They accounted for 21.3 percent of all foreign tourist spending, far outpacing visitors from Taiwan, which accounted for 13.4 percent and Korea with 11.8 percent.

Chinese tourists wait for a bus in Tokyo's Ginza shopping district in Tokyo on March 12, 2016. [AP/YONHAP]

Korea, meanwhile, is already seeing an uptick in Chinese spending, boosted by the government’s recent decision to allow visa-free group travel. Chinese tourist spending at online fashion platform Musinsa’s Myeong-dong and Seongsu offline stores rose 126 percent and 89 percent, respectively, from Nov. 1 to 19 compared to a year earlier.

Major discount chains report similar trends. At key Seoul branches of Daiso, payments made through Alipay, WeChat Pay and UnionPay — popular among Chinese travelers — jumped 130 to 250 percent year-over-year in October. From early November to Nov. 20, Daiso’s Myeong-dong Store saw a 200 percent boost, while the Gangnam flagship posted 230 percent.

“Beauty and personal-care products have ranked No. 1 in sales at Daiso stores located in tourist districts for the past two months,” a Daiso official said.

Convenience stores also posted sharp gains. At 70 Seven-Eleven locations in tourist zones such as Hongdae and Gangnam, sales from Nov. 1 to 20 rose 70 percent from a year earlier, with toy and souvenir sales surging 430 percent. GS25 reported a 166.2 percent increase over the same period.

China’s return to Korea is becoming clearer. In September, 503,186 Chinese tourists visited Korea — up 19 percent year-over-year — according to the Korea Tourism Organization. Industry officials expect stronger rebounds if visa-free entry continues and China–Japan tensions persist.

Foreign tourists enjoy shopping in Myeong-dong, central Seoul, on Nov. 13. [NEWS1]

“During past disputes, like the Senkaku Islands or the Hong Kong protests, demand shifted to Korea,” one convenience store executive said. “With the visa policy, Korea could emerge as the alternative destination to Japan.”

Beauty-sector companies report similar momentum.

“Thanks to K-content, we already feel the rise in Chinese and Japanese tourists,” one cosmetics executive said. “Even in this regional standoff, we will strengthen our product and content competitiveness to draw long-term demand.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom. BY NOH YU-RIM [yim.seunghye@joongang.co.kr]