Chinese capital expands grip on S. Korea’s travel market with low-price strategy

Graphics by Kim Sung-kyu

Chinese capital is rapidly expanding its influence in South Korea’s leisure and entertainment sectors, moving beyond gaming and media into travel. Lodging and airfare have become new targets, where Chinese firms use substantial financial backing to capture shares in Korea’s relatively small market.

Online travel agency Trip.com is leading this push with aggressive discounting. Supported by Trip.com Group, China’s largest travel company, it attracts Korean consumers by offering hotel and flight deals that undercut domestic competitors.

A 40-year-old office worker named Lee recently booked a one-night stay at a five-star hotel in central Seoul through Trip.com for 390,000 won. The same room was priced above 450,000 won on other platforms. After applying Trip.com’s discount coupons, Lee saved nearly 60,000 won, a notable gap given that most booking sites vary by only 10,000 to 20,000 won.

According to mobile index data from analytics firm IGAWorks, Trip.com topped travel app downloads in South Korea this January with 340,000 new installs. Domestic rivals Yeogi Eottae and Yanolja followed with 280,000 and 220,000 downloads, respectively.

Graphics by Kim Sung-kyu

Trip.com Group, headquartered in Shanghai, rebranded from its original name, Ctrip, to Trip.com in 2019 to reduce its Chinese image and appeal to global users. Like Chinese e-commerce giants Temu and AliExpress, which have gained ground in South Korea through low prices, Trip.com is pushing a lowest-price strategy to dominate the South Korean travel market.

A domestic travel industry insider said, “The lodging and airfare markets are highly price-sensitive because price comparison sites are widely used. Even a small price difference leads consumers to choose cheaper options. Trip.com targets Korean consumers by investing heavily to offer industry-lowest prices.”

Trip.com is rapidly growing in South Korea’s airline ticket market. According to January data from the BSP (Billing and Settlement Plan) system, it ranked fifth with a market share just above 5%. The platform steadily advanced from 13th in 2022 to eighth in 2023, and sixth last year, finally breaking into the top five. In ticket sales, Trip.com recorded 44.9 billion won in January, closely trailing fourth-ranked Yellow Balloon Tour with 47 billion won.

Since acquiring flight comparison site Skyscanner in 2016, Trip.com has boosted sales by prioritizing low-fare tickets sold directly on its platform. For example, round-trip flights from Incheon to Osaka in mid-June cost about 20,000 won less on Trip.com than on other booking sites.

Chinese capital has deeply penetrated South Korea’s entertainment and gaming industries. According to the Financial Supervisory Service’s electronic disclosure system, Tencent Music recently acquired Hybe’s entire 9.38% stake in SM Entertainment, becoming the third-largest shareholder after Kakao and Kakao Entertainment. Alibaba, China’s largest e-commerce company, bought a 4% stake in SM back in 2016. Together, Chinese investors now hold nearly 15% of the company.

Tencent’s reach in Korean entertainment is wider. In 2016, through its subsidiary Tencent Mobility, it acquired a 4.3% stake in YG Entertainment, which it still holds. Another Tencent subsidiary, SkyBlue Creative Investment, owns 2.96% of Kakao Entertainment.