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China bans tour groups to South Korea

Chinese ban Korea - Retail in Asia

In a dramatic escalation of the THAAD anti-missile system dispute, China has ordered travel agencies to stop selling group tours to South Korea, according to widespread media reports in both countries.

The ban, if confirmed, is set to have a profound report on the Korean economy and particularly its interrelated tourism and travel retail sectors.

As reported, the Chinese authorities are outraged by South Korea’s decision to deploy the US defence system later this year. While the South Korean government says the move is a necessary protection against attacks from North Korea, the Chinese government insists the move destabilises the region and poses a threat to China’s own security.

Today’s report from South Korea’s most-respected news agency spells out the gravity of the escalating THAAD dispute.

From a travel retail perspective, the news is made worse by the fact that THAAD will be sited on land owned by Lotte Group, parent company of South Korea’s most powerful duty free retailer, Lotte Duty Free.

SEE ALSO: China threatens Lotte with sanctions over missile site

The markets have already made up their minds about the potentially calamitous effect of any group tour ban. Hotel Shilla Co (parent of The Shilla Duty Free) and Korean beauty giant Amore Pacific’s stocks both slumped today on the news.

Now the situation is set to deteriorate even more – and quickly. Quoting unnamed industry sources, South Korea’s Yonhap News led the reports today claiming that China has instructed travel agencies in the country to stop selling trips to South Korea.

Yonhap said that the China National Tourism Administration (CNTA) called travel agencies in Beijing to a meeting on Thursday and issued verbal instructions to suspend sales of all travel packages, both online and offline, to South Korea. The agency concluded: “It means that any package tours or free trips sold by travel agencies will not be available to Chinese wishing to visit Korea.

“While ordering to immediately put a halt on all trip sales, the agency told them to exhaust those that have already been sold by mid-March,” the report continued, quoting the same sources. “Such a measure will likely be imposed on the travel agencies based in other cities nationwide following regional meetings that will be held soon, they added.”

(Source: Moodie Davitt Report)

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