Published : Sept. 2, 2011 - 21:01
Outside Dongwha Duty Free Shop in the center of Gwanghwamun, central Seoul, rows of tour buses lined up in the parking lot demonstrate China’s ever-growing thirst for Korea.
Tourists wait for their tour bus after shopping at Dongwha Duty Free Shop in Gwanghwamun on Thursday. Lee Sang-sub/The Korea Herald
Inside, hundreds of tourists swarmed into luxury brand stores, looking to grab a cheaper Louis Vuitton, Gucci or Hermes products.
The shops, long beloved by the Japanese, are increasingly being frequented by Chinese travelers, especially since a tsumani hit Japan early this year.
That is also the case at other duty free malls and major department stores in central Seoul. At the main branch of Shinsegae Department Store, the number of Chinese customers now more than doubles that of Japanese. Lotte Department Store’s main branch has seen the two groups of shoppers switch places.
“It’s like a heaven for shoppers like us,” said Zhu Jia, a 23-year-old student from Shanghai. “I’m here with my friends to travel and shop around Seoul ― there are so many shopping places and department stores in Myeong-dong and Jongno.”
Tourism is one of the thriving sectors here on the back of surging Chinese demand.
The rise of deep-pocketed consumers in one of the world’s fastest-growing economy invigorates global markets for air travel, retail and even property.
According to Samsung Economic Research Institute, the number of Chinese overseas travelers jumped more than 13-fold to top 50 million last year from a mere 3.74 million in 1993.
China is now the world’s fourth-largest spender on international tourism with $43.7 billion in 2009, behind Germany, the United States and Britain.
“China’s economic growth and rising income levels enable more and more Chinese to travel abroad,” Kim Jin-hyuk, a SERI researcher said in a report. “They emerged as core customers in the world’s tourism industries partly due to their big travel budgets.”
Buying Korea
The number of Chinese visitors to Korea has also maintained double-digit growth rates since 2004, reaching nearly 2 million last year, according to the Korea Tourism Organization.
Albeit fewer in number than the Japanese, they spend nearly 50 percent more, averaging at $1,560 per person versus $1,070.
Among the biggest beneficiaries are local cosmetics manufacturers.
Korea’s low-price beauty labels such as The Face Shop, Missha and Nature Republic have enjoyed a bonanza in recent years thanks to Japanese and Chinese shoppers.
Each of the firms operate four to six multi-story shops solely in Myeong-dong, a well-known shopping district in downtown Seoul, in which staff members guide customers in a number of different languages.
Nature Republic rakes in 1.2 billion won ($1.13 million) in monthly average revenue from just one of its flagship stores there.
“The branch helped promote our brand not only to locals but also foreign customers by laying a footing in the Myeong-dong area,” a company official said.
Xiaofeng Zhuang, a 30-year-old company worker from Beijing, gave more credit to culture for the spending spree.
“I think the cultural effect generating from Korean dramas, movies and celebrities is the most important factor for girls visiting Korea nowadays,” he said.
“Chinese girls living in big cities such as Beijing, Shanghai and Guangzhou love fashion. They come here to catch up with Korea’s latest trends.”
The Korean Wave, or hallyu, is a big attraction to youngsters like Ling Wen.
“Shopping is great, and we love Korean celebrities like Rain, 2PM, Big Bang and TVXQ,” the 21-year-old Guangzhou resident said.
“They are really popular in mainland China and it’s one of the things that makes me come hoping to see them somewhere around Seoul.”
While entertainers are aggressively going abroad, the Korean government eased visa rules for Chinese visitors last August in an effort to bring in more capital from the country.
The country’s two top carriers ― Korean Air and Asiana Airlines ― have expanded flights to more than 20 cities across China.
Travel agencies, hotels and retailers host promotions and events specifically for them almost all the year round.
Real estate boom
Property investment by Chinese companies and individuals has been soaring in the past few years.
Chinese land ownership in Korea also grew to 3.14 million square meters as of 2010, valued at about 472.5 billion won. That accounts for about 1.5 percent of the total foreign tenure.
Much of their investments concentrate on projects in Jeju, Korea’s southernmost resort island, which boasts a mild climate and stunning scenery.
With prices skyrocketing at home and the yuan appreciating, wealthy Chinese nationals are increasingly seeking second homes in a cozy living environment abroad.
Chinese firms are also striking massive deals with local developers to build upscale residential, commercial and leisure facilities on the island.
With the status of having the nation’s sole free international city, its self-governing authorities have been striving to court foreign investors by offering visa-free entry, lower taxes and hassle-free business licensing.
In February 2010, the Jeju government upped its ante by revising the immigration law to grant permanent residency to foreigners who invest in property worth $500,000 or more and live there for at least five years.
“The construction sector in Jeju is blooming in line with increasing Chinese investments,” said Ryoo Do-yull, assistant chief of investment policy for the provincial government. “They would help boost the local economy by increasing consumption and keeping up the tourism industry.”
Raon Leisure Development Company is one of some 25 Korean companies engaged in large-scale resort projects on the island.
The Jeju-based real estate developer has secured a whopping 101 billion won worth of deals with foreigners ― mostly Chinese ― for its luxury villas named Raon Private Town.
To be launched in October, the island’s largest residential resort complex features more than 900 housing units, a nine-hole golf course and facilities such as spa, business center, swimming pools and tennis courts.
Baitong Group, a Chinese real estate developer, said in May it would invest $70 million in a project to build condominiums for Chinese residents.
Benma Industrial Co. a Chinese builder, agreed to inject $300 million into a resort complex in Jeju in partnership with local resort operator Skybridge.
Other developers include Guangdong-based Cheonhae Group and Hunan-based Sany Group Co.
Diversification
Korea’s central government is notching up efforts to lure more Chinese resources and diversify investment. It aims to raise the annual amount more than 10-fold to $2 billion in 2015 from the current $500 million.
The state-run Korea Trade-Investment Promotion Agency set up promotion divisions dubbed China Desk at its Seoul headquarters and Shanghai branch last year and plans for more offices in China.
The two countries have agreed to build an investment cooperation network to share information among companies, investment support agencies and local governments, while building a database of domestic firms seeking Chinese capital, KOTRA said.
“China is one of the largest investors in the global market with massive foreign reserves, but has not been able to maximize its capability,” a KOTRA official said. “To boost trade, we should construct a strategic cooperation network and multiply the inflow of Chinese capital.”
By Shin Hyon-hee (heeshin@heraldcorp.com)