As diplomatic friction between China and Japan sharply reduces visits by Chinese tourists to Japan and the won weakens, Korea is emerging as a new "value-for-money destination" for travelers from mainland China, according to an analysis.
On the 16th (local time), the South China Morning Post (SCMP) in Hong Kong reported that as diplomatic tensions between China and Japan persist, Beijing has advised its citizens to refrain from traveling to Japan, prompting hundreds of thousands of Chinese tourists to change their plans. Relations between the two countries cooled rapidly after Japanese Prime Minister Sanae Takaichi mentioned in Oct. the possibility of Japan's involvement in the event of a Taiwan Strait contingency, and about 1,900 flights between China and Japan were canceled over the course of this month.
In this process, Korea has emerged as an alternative destination. According to the Chinese travel platform Qunar, based on weekend air-ticket bookings on the 15th–16th of last month immediately after Beijing released its Japan travel warning, Korea overtook Japan to rank No. 1 among popular destinations. The industry says Russia and some Southeast Asian countries are also benefiting, but Korea is seen as particularly well positioned in terms of geographic accessibility and the consumer environment.
Exchange rates have also boosted Korea's appeal. The Korean won has been the weakest among major Asian currency in the second half as the U.S.–Korea interest-rate gap widened and funds flowed into U.S. stocks. According to the Bank for International Settlements (BIS), Korea's real effective exchange rate in Oct. fell to the lowest level in 16 years. From July 1 to the 16th of last month, the Chinese yuan rose 9.4% against the won.
Subramania Bhatt, CEO of the travel marketing corporations China Trading Desk, said, "With the weaker won, Korea has become increasingly affordable for Chinese travelers, while Japan has become a destination that 'feels more expensive' due to political tensions."
The heightened price sensitivity of Chinese consumers has also played a role. Gary Ng, Asia-Pacific chief economist at the French investment bank Natixis, said, "Since COVID-19, Chinese consumers have become much more price-sensitive, and the low domestic inflation environment has reinforced this tendency." There is also an outlook that the weak won will continue into early next year.
On top of that, improving Korea–China relations are helping to fuel tourism demand. The two countries recently implemented a mutual visa-waiver policy, and the fact that Chinese President Xi Jinping visited Korea in Oct. for the first time in 11 years to attend the Asia-Pacific Economic Cooperation (APEC) summit and held a summit with President Lee Jae-myung also acted as a positive factor.
According to the Korea Tourism Organization (KTO), as of Oct. this year, 4.7 million Chinese tourists visited Korea, already surpassing last year's annual total. CEO Bhatt said, "The exchange-rate effect, combined with visa easing and the appeal of K-content, is spurring demand for shopping as well as beauty and medical tourism."