What is the impact of THAAD on Korea’s duty-free business?

Posted on Posted in Blog

What has the impact of THAAD been on duty-free operations of Lotte & Hotel Shilla? 

Due to the ongoing THAAD controversy, Chinese consumers have boycotted Korean businesses and curtailed tourism to Korea. While it’s clear that the impact on Korean duty-free stores is quite negative, nobody quite knows just how bad.

Our analysis of Chinese consumer spending at Korean duty-free giants Lotte and Hotel Shilla shows three consecutive months of negative y/y comps.  The data starts showing negative comps that begin in the back half of March, which then accelerate into April and May, with both months down more than 50% y/y:

 

Chinese Consumer spending at Duty-free stores of Lotte and Shilla

 

However, relations between China and South Korea are thawing. Chinese airlines are resuming flights to Korean tourist spots like Jeju Island, and the Korean government is suspending the deployment of additional launchers. Our data has yet to show any signs of recovery, but we will be keeping close tabs on Chinese consumer spending at Korean duty free stores as well as on our real-time data for Korean cosmetics. To be the first to find out about a rebound in the data, please contact us here.

Sandalwood Advisors is Asia’s first alternative data platform. For more details about the performance of Korean duty-free or cosmetics sales to Chinese consumers, please contact us here.  You can also follow us on Twitter @sandalwooddata or on LinkedIn