Surge in Chinese tourists to S. Korea sparks optimism for various sectors

Chinese group tourists enter Incheon International Airport on Aug. 24. [Photo by Han Joo-hyung]

The influx of Chinese tourists entering South Korea is rapidly increasing. While group tourism from China has yet to fully resume, the number of Chinese tourists entering the neighboring country until July has already surpassed the total count for the same period last year.

Recent waves of tourists from Taiwan, Hong Kong, and Japan are being joined by Chinese group tourists, generating expectations of significant stock price increases coupled with improved performance in sectors such as cosmetics, duty-free shops, casinos, medical beauty devices, and K-contents.

On Wednesday, the Korea Tourism Organization announced that the number of Chinese tourists who entered the country from July 1 to August 30 amounted to 224,805, marking a staggering 1,155.4 percent increase compared to a year ago. This July, the number of Chinese tourists was 12.5 times higher than that of the same month last year, indicating a substantial increase in arrivals through Incheon International Airport and other entry points.

The cumulative number of Chinese tourists entering South Korea in the first seven months of this year reached 771,198, up 728.4 percent from a year earlier.

This figure only reflects the Chinese visitors who entered the country until the end of July. Chinese group tourism, which the Chinese government officially permitted for South Korea on August 10, is expected to take off during the National Day holiday period from late September to early October.

As Chinese tourists return to South Korea, industries related to cosmetics, casinos, hotels, duty-free shops, medical beauty devices, and entertainment are experiencing positive stock movements. According to the tourism statistics released by the Korea Tourism Organization on Wednesday, foreign visitors who came to South Korea in July surpassed one million for the first time since January 2020.

In response to this news, Global Tax Free, a company that facilitates tax refunds for foreign tourists when they purchase goods in South Korea, exhibited heightened sensitivity in the market. Prior to the pandemic in 2019, the company’s annual sales amounted to 59.8 billion won ($45.2 million) with an operating profit of 6.9 billion won. However, in 2020, it recorded sales of 10.2 billion won and an operating loss of 11.4 billion won, feeling the direct impact of the pandemic. Although losses continued until last year, the situation in 2021 is comparatively better. In the first half of this year, the company posted an operating profit of 4.7 billion won over sales of 40.5 billion won.

Cosmetics stocks like Amorepacific and LG Household & Health Care, as well as hotel stocks like Hotel Shilla and Lotte Tour Development, are also drawing attention. Casino operators such as Grand Korea Leisure (GKL) and Paradise are also expected to benefit. On this day, the stock prices of LG Household & Health Care and Amorepacific saw strong gains.