Retail in Asia

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How THAAD could affect South Korean duty-free retailers

Incheon Duty Free

Fears are deepening in the country’s travel retail industry of a severe Chinese backlash following the South Korean government’s decision to deploy the US-developed advanced missile defence programme Terminal High Altitude Area Defence system (THAAD).

As reported, the government plans to deploy THAAD some 220k southeast of Seoul by late 2017, a move that has outraged the Chinese government.

The resultant storm is gathering force by the day. Chinese reports earlier this week revealed that local TV channels have been told to postpone any new programmes featuring South Korean stars.

“We are deeply concerned,” a senior duty free retail executive told The Moodie Davitt Report. “The market has been recovering strongly after the MERS collapse last year but this makes us all uncertain.”

Another veteran retailer told us: “In Korea, many people, especially in the travel industry, are worrying about the impact of THAAD on sales. Some travel and event reservations by Chinese have been cancelled due to the uncertainty.”

Citing industry sources, it said that the number of Chinese tourists who have booked their trips through tour agencies that schedule a visit to Lotte Duty Free in Seoul in September during Zhong Gui Jie (one of the three major Chinese holidays) is down -20% year-on-year.