Korean Duty-free shops’ sales to foreign customers rise in May

South Korean duty-free shops saw sales to foreign customers increase for the first time in three months in May, industry data showed, a sign that Beijing’s trip restrictions may be wearing off.

The sales to foreigners at local duty-free shops reached US$655.9 million last month, up a solid 11.1 percent from the previous month, where they stood at US$590 million, according to the data from the Korea Duty Free Shops Association.

The on-month increase marks the first rebound following a big drop in the number as the Chinese government exerted pressure on the country’s travel agencies to stop selling package tours to South Korea in an apparent retaliation over the deployment of a U.S. missile system on the Korean Peninsula.

Beijing’s ban dealt a blow to the local duty-free industry, which has heavily relied on Chinese demand. Chinese tourists accounted for 46.8 percent of all tourists coming to South Korea last year.

It is attributed to the increasing sales of airport duty free shops by increasing number of outbound for golden holiday last month.

The latest tally showed that while South Korean nationals bought less at duty-free shops in May, a rise in demand by foreigners pushed up total sales 4.8 percent on-month to US$937 million. This is also the first overall increase in three months.

The association added the number of foreign customers who visited shops in the country increased 2.6 percent on-month to 1.02 million from 998,000 in April. The rise is the first upward trend in four months.

Unlike the expectation that the Thaad retaliation will be eased after the inauguration of new government, the ban on the Chinese visit has not yet been resolved. Even if the China stops the Thaad retaliation within this month, it takes at least one month or two months that group tourists visit Korea, which means Chinese tourist will visit Korea in September.

A downtown duty-free shop official said, “There are not any Chinese tourists who visit our duty-free shops yet.” There is no factor to improve the relationship between the two countries.

Although sales temporarily recovered, it is too early to predict that Chinese will return soon.