Hong Kong retailers may benefit from missile row

China’s ban on group tours to South Korea in retaliation against a planned deployment of a missile defence system there could see a revival of tourism to Hong Kong, where retailers have been struggling.

“South Korea, Southeast Asia and Hong Kong are all short-haul attractions favoured by mainlanders, and if one market faces headwinds there can often be a knock-on effect on the others,” says investment firm CLSA head of Hong Kong consumer research Mariana Kou.

Beijing last week ordered domestic travel agents to stop offering group tours to South Korea, as well as hotel and flight booking services for individual travellers.

Although designed to protect against attacks from North Korea, South Korea’s installation of THAAD radar is considered by Beijing as a threat.

Mainland Chinese visitors to South Korea rose to 8 million last year, almost quadruple the level of 2012. The Korea Tourism Organisation estimates that a 50 per cent drop in mainland tourism would hit the tourism sector to the tune of US$9.6 billion.

People speaking Chinese were noticeably absent from the shopping district of Myeong-dong in Seoul yesterday, just as the Chinese government’s ban went into effect, reports The Korea Times.

“I think the number of Chinese tourists has declined almost 70 to 80 per cent,” says an information officer helping foreigners. “There are obviously fewer Chinese tourists here than Japanese visitors these days.”
Previously, Chinese tourists were crowding shops to buy cosmetics and luxury goods. Now the owners of so-called “road shop brands”, such as Innisfree, Nature Republic and The Face Shop, are struggling to attract custom. Now their workers are speaking Japanese and distributing leaflets and maps in the language.

Meanwhile, some tourist buses have been taking Chinese groups to the main Lotte Department Store, but tourism officials expect this mark to dry up by the weekend. “Those who came to Korea before the measure have yet to leave,” says one official.

Experts say the situation could see middle-class shoppers from China’s less affluent cities flock to Hong Kong as an affordable alternative, reports The South China Morning Post.

Hong Kong Tourism Board data shows that spending by individual travellers has been trending downward. The average overnight visitor to the city spent HK$6602 (US$850) last year, down from HK$7234 in 2015. The board predicts a further 5.2 per cent drop to HK$6256 this year.