SEOUL: For 29-year-old Ji Won, running a business in one of Seoul’s most popular shopping districts feels like an “endless and fruitless wait” these days.
The South Korean, who has been selling children’s wear in Myeongdong out of a push cart for the past three years, said her income has more than halved over the past two months.
“I used to earn about 3,000,000 Korean won (about S$3,703) a day but now on some days, I struggle to earn even half of that,” she told Channel NewsAsia in Mandarin – a language she had picked up over the years to cater to the boom in big-spending Chinese tourists to South Korea.
A recent drastic drop in the number of mainland visitors due to “South Korea’s bad relationship with China”, has delivered a blow to small business owners like her, said Ji Won.
According to latest figures from the Korea Tourism Organisation (KTO), tourist arrivals from the mainland fell 66.6 per cent to 227,811 in April from a year ago, after having plunged 40 per cent in March.
With Chinese holidaymakers making up the biggest group of foreign tourists to South Korea, the slump has had a significant impact on overall visitor arrivals. For April, the total number of tourist arrivals declined for the second consecutive month, down by 26.7 per cent year-on-year to 1.07 million, KTO’s statistics showed.
Underpinning that is a travel ban from Beijing on tour groups to South Korea which took effect in mid-March as both countries embroil in a diplomatic row over the deployment of a US missile defence system on the Korean peninsula.
While South Korea has insisted that the Terminal High Altitude Area Defense (THAAD) system serves as a counter to Pyongyang's growing missile capabilities, China has criticised the deployment as a threat to its “security interests” and responded with a slew of measures seen as economic retaliation.
“China chose to show displeasure through an economic retaliation, ordering travel agents to stop selling tour packages to South Korea and reduced flights to the country,” said Euromonitor analyst Lim Yu Xian, referring to the rapid decline in Chinese tourists since March.
“Whether locally or abroad, the consumption of Korean products by Chinese consumers have also fallen.”
SOME LOSE SLEEP, SOME SEEK ALTERNATIVES
It is not just small business owners that are reeling from China’s boycott.
An employee from The Face Shop said the beauty brand’s stores in Myeongdong have suffered “some impact”, with the recent drop in sales being more severe than what was felt during the outbreak of the Middle East Respiratory Syndrome (MERS) in 2015. Then, the spread of the deadly virus in South Korea chilled consumer sentiment and a booming tourism industry.
“Business definitely dropped over the past two months and the impact has been quite persistent, compared to the MERS outbreak which only had a really short-term effect,” said the Chinese employee who has been working in Seoul for the past three years and declined to be named.
But the beauty brand, owned by LG Household & Healthcare, has been holding up due to its diversified customer base, she added.
“Luckily, the Face Shop is quite well known in other parts of Asia like Singapore, Malaysia and Thailand so we have been depending on customers from these countries, unlike the duty-free shops nearby. They are the ones that depend a lot on Chinese customers and I heard they were retrenching last month.”
Since the group tour ban took effect, Lotte Duty Free has seen sales to Chinese customers fall 40 per cent year-on-year, an AFP report cited a company spokeswoman as saying. Mainland customers make up 70 per cent of total sales at the duty-free store, the spokesperson added.
Over at Dongdaemun, South Korea’s largest wholesale and retail shopping district with more than 20 shopping malls, the streets were unusually quiet when Channel NewsAsia visited on a Thursday night.
Min, who runs a fashion store at one of the malls called Hello apM, observed a 20 per cent decline in Chinese tourists since March. Fortunately, she has a back-up plan to fall on.
“I set up an account for my store on WeChat last year and I’ve been taking orders from Chinese customers,” said Min, referring to China's most popular messaging app. “They may not want to visit Seoul now but they still love our fashion.”
NORTH KOREA’S WAR THREATS
Other than the impact from dwindling mainland tourists, some businesses mentioned the simmering threat of North Korea as a contributing factor that has been “scaring away” tourists.
“I’ve had some customers who ask me whether North Korea is really going to attack Seoul,” said a shop assistant at beauty brand Tony Moly. “To be honest, we South Koreans don’t think it will ever happen but tourists wouldn’t know and I think what happened lately has been scaring away some people.”
Tension on the Korean peninsula has remained high for the past decades, with recurring cycles of provocation and reaction. Since the beginning of last year, Pyongyang has stepped up its military build-up with more missile and nuclear tests, raising concerns among its immediate neighbours.
But industry observers noted that worries over an armed conflict on the Korean peninsula will likely have a smaller impact than China’s retaliatory measures. “(North Korea) is a perennial threat that foreigners and locals have come to accept thus they are not too worried this time round as well,” said Euromonitor’s Ms Lim.
Mr Madoni Arno is one traveller who is not too concerned about war threats from North Korea.
“If I have to come to South Korea, I won’t think about North Korea. It won’t stop me at all,” said the French, who has been to South Korea twice. “I like the people… and the fact that this place is very clean. I'm from Paris where underground passages can be really dirty but it’s very clean and quiet here.”
Ms Miko Sato from Japan agreed though she knew of people who have put on hold holidays to Seoul amid an escalating crisis between the two Koreas. “To be honest, Tokyo is also under the threat of North Korea so I don’t have a reason to cancel my holiday. There is a new president so maybe things will improve.”
MOON JAE-IN TO THE RESCUE?
And the election of liberal politician Moon Jae-in as South Korea’s new president is seen by many in the tourism industry as the key to a turnaround.
“We don’t think this will last. There is a new president now and we think he will look into this soon,” said the employee from The Face Shop in Myeongdong. “In fact, there seems to be a bit more Chinese tourists these days.”
Experts that Channel NewsAsia spoke to echoed that sentiment.
“After the deployment of THAAD, the Chinese government initially took small retaliatory steps such as not issuing tourist visas, but the actions against South Korea deepened as time passed. According to our estimates, if such retaliatory measures continue, South Korea’s economic growth could be hit by 0.5 to 1 per cent, which could be a fatal blow,” said Ms Kim Yeikyoung, a legislative researcher at the National Assembly Research Service (NARS) in Seoul.
But there are signs of softening in China’s retaliatory actions of late, according to Ms Kim, which hint at the possibility of an improvement in bilateral relations between the two Asian neighbours.
“We understand that since President Moon was elected, some visas have been re-issued… Apart from sending a special envoy to China, the president also had a 40-minute phone call with Chinese leader Xi Jinping. During the recent ‘One Belt One Road’ forum, South Korea’s representative had a one-on-one meeting with Mr Xi… so in my opinion, the rough relations with China will change for the better.”
For Ji Won, all she wants is for this glimmer of hope to materialise for her to continue her business in one of the country’s most competitive shopping districts.
“Everyone’s saying that things will get better now that we have President Moon,” she told Channel NewsAsia. “I hope so too otherwise I may have to move to another location or start another business.”
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