Duty-Free Shops Made Chinese Stay Away

Yun Kim, July 18, 2017, 9:39 a.m.

Duty-free shops are likely to see their annual sales drop for the first time in 14 years amid an unofficial Chinese boycott.

Last year's sales totaled at W12.27 trillion, but this year's are projected to plunge 14 percent to W10.5 trillion (US$1=W1,129).

Duty-free sales dropped four percent in 2003 amid the Severe Acute Respiratory Syndrome scare but have been growing ever since. They weathered later problems like North Korea's nuclear tests and the Middle East Respiratory Syndrome scare with ease. 

But there was no protection against the body blow of Chinese tour groups staying away over the Terminal High-Altitude Area Defense battery controversy, because Chinese tourists make up 60 percent of their total customers. When they disappeared, duty-free sales plummeted 30 to 40 percent.

Jang Sun-wook, the CEO of Lotte Group's duty-free shopping business, recently warned staff that the decline will continue.

The Korean duty-free market nearly doubled from W6.83 trillion in 2013 to W12.27 trillion in 2016, and the government, seeing this fast growth, increased the number of duty-free licenses in Seoul from six to 13 only last year.

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