Chinese visitors to South Korea are buying less from global luxury mainstays like Louis Vuitton and Chanel in favour of cheaper homegrown brands, as young, independent travellers make up a bigger share of tourists.
Lured by the “Korean Wave” of culture exports, from soap operas and K-pop music to food and fashion, price-conscious younger Chinese visitors are seeking a more authentic and less expensive shopping experience.
South Korea trails only Thailand as an overseas destination for Chinese travellers, whose heavy retail spending has helped make South Korea the world’s largest duty free shopping market.
The emphasis on value will put further pressure on global luxury retailers already grappling with slowing sales in China after years of skyrocketing growth, as a government crackdown on graft and lavish spending bites.
Average prices on best-selling items from global luxury brands in South Korea are cheaper than they are in mainland China, but still cost more than in Europe, Singapore and Dubai, according to HSBC data.
At downtown Seoul duty free shops run by Hotel Lotte’s Lotte Duty Free and the Samsung Group’s Hotel Shilla, LG Household & Healthcare’s Whoo and Amorepacific’s Sulwhasoo cosmetics were the top-selling brands in 2015, overtaking Louis Vuitton, Chanel and Richemont’s Cartier, store data shows.
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The number of Chinese tourists to South Korea dipped 2.3 per cent in 2015 to about six million due to the deadly Middle East Respiratory Syndrome (MERS) outbreak.
However, brokerage CLSA says Chinese inbound traffic growth rebounded from September and should jump by 28 per cent in 2016. The South Korean government expects a record eight million Chinese visitors in 2016.
Chinese tourists to South Korea are getting younger: the share of those in their 20s and 30s rose to 46.1 per cent in 2015, from 40.9 per cent in 2013, according to the government-run Korea Culture and Tourism Institute.
While older Chinese tourists typically travel in groups where they are ferried between shops catering to them, Chinese millennials tend to be better-informed about what they want, travel independently and spend less on shopping.