S.Korean firms woo China's Singles Day shoppers as detente boosts hopes
08/11/2017 23:00
* Tension over anti-missile system hits No.1 duty free
market
* Chinese tourists to S.Korea fell 61 pct on year
* Global No. 2 Lotte Duty Free booked first loss in 14 yrs
* Lift in China's group travel ban needed to complete thaw
By Joyce Lee and Haejin Choi
SEOUL, Nov 9 (Reuters) - South Korean companies, after all
but giving up on marketing in China during a diplomatic spat
this year, are rolling out major promotions for Saturday's
Singles Day shopping extravaganza, hoping Chinese consumers -
and their big bucks - will return.
South Korean businesses from cosmetics firms to casinos and
duty free stores were hit hard after China unofficially banned
group tours to South Korea in March, upset with Seoul over its
decision to install a U.S. anti-missile system that Beijing
believes threatens its security.
But last week's agreement by Seoul and Beijing to move past
the dispute has boosted hopes group tours may be allowed in the
near future, spurring the first big marketing push in nearly a
year by South Korean firms. urn:newsml:reuters.com:*:nL4N1N643M
They have seized on China's Singles Day online shopping
bonanza, which has grown to the world's biggest retail event and
last year shifted more goods than the United States' Black
Friday and Cyber Monday combined.
Chinese internet giant Alibaba BABA.N introduced the
annual online shopping extravaganza concept in 2009 as part of a
day for bachelors and bachelorettes to celebrate their single
life, with November 11 chosen as "1" resembles a solitary
person. Last year, Alibaba alone racked up a record $18 billion
worth of Singles Day sales.
This year, South Korean duty free operator Hanwha Galleria
027390.KS is offering 110,000 won ($100) for 111 members of
its Chinese site that click a banner starting 11am on November
11, while Doota Duty Free offered 111,111 won toward purchases
for 1,111 people every day starting 11:11 am until November 11
at its Chinese online mall.
Asiana Airlines 020560.KS is offering discounted tickets
from China to South Korea and other destinations on Alibaba's
Alitrip travel agency website between November 11-15, as well as
free airport lounge passes for passengers transiting at Seoul's
Incheon Airport.
Lotte Duty Free, world's second largest duty free operator
after Dufry DUFN.S , is also offering cash toward purchases for
people who write their Singles Day wish list and get replies on
its website.
"We tried to diversify our customers to Southeast Asia and
other places since the THAAD crisis, but their buying power
falls far short of the Chinese," said a Lotte Duty Free
official. "We are hoping for a rebound to past years' sales
levels."
So are investors. Shares in South Korea's largest department
store chain Lotte Shopping 023530.KS and duty free operator
Hotel Shilla 008770.KS rose more than 12 percent and 7 percent
respectively, compared to a 2 percent rise in the wider market
.KS11 since the two countries announced their detente on Oct.
31. urn:newsml:reuters.com:*:nL4N1N643M
'NO POINT'
South Korean firms' burst of promotions is a far cry from
their silence during the diplomatic standoff, as South Korean
retailers quietly passed Chinese holidays such as August's
Double Seventh Day and national holidays in October.
"All (South Korean) duty free stores cut back on marketing
toward Chinese customers starting April. With circumstances like
the travel ban, there was no point," said a Hanwha Galleria
official.
South Korea's duty free industry, the world's largest with
12.3 trillion won in sales last year, was hardest hit as Chinese
group tourists had contributed around 50-60 percent of their
revenue before March.
Travellers from China to South Korea in the seven months
from March to September fell 61 percent from a year ago.
Lotte reported its first operating loss in 14 years in the
April-June quarter, while The Shilla Duty Free's operating
profit in the first half of 2017 fell more than 40 percent.
Duty free operators know Singles Day alone won't be a
panacea. China online sales are only a small proportion of total
revenue - about 10 percent for Lotte Duty Free last year - but
they hope it will set the stage for a strong recovery once the
travel ban is lifted.
"With a lift in the travel ban, charter flights will first
need to be booked, all the manpower at Chinese travel agencies
that's been taken off South Korea and redirected to other
destinations restored, tour packages remade. We expect three to
six months before things normalise," said the Lotte Duty Free
official.
"We're waiting for the day."
($1 = 1,112.9000 won)
(Reporting by Joyce Lee and Haejin Choi; Additional reporting
by Yuna Park and Heekyong Yang; Editing by Lincoln Feast)
((jungyoon.lee@thomsonreuters.com; +82 2 3704 5609; Reuters
Messaging: jungyoon.lee.thomsonreuters.com@reuters.net))
Keywords: SINGLES DAY/SOUTHKOREA CHINA