“I want to bow down flat and pay respects to the idol my daughter loved. Isn’t it thanks to those idols that foreign tourists are visiting Korea like this?”
This was said by an official from the duty-free industry on the 24th. As the exchange rate of the won against the U.S. dollar has risen to the highest level since the 2009 financial crisis (indicating a devaluation of the won), the travel and duty-free sectors are striving to find hope in the institutional sector targeting foreign tourists. While a decline in the value of the won is likely to suppress overseas travel among domestic tourists, it could conversely increase demand for domestic travel among foreigners.
A prominent example is Japan. Due to the depreciation of the yen (a decrease in the value of the yen) after 30 years, Japan is currently facing issues of overtourism. According to the Japan National Tourism Organization, the number of foreign tourists visiting Japan in November this year was 3.187 million. The cumulative number of tourists this year is 33.37999 million. The Japan Economic Newspaper reported that the number of tourists in Japan has already far surpassed the statistics from 2019, before the COVID-19 pandemic.
This influx of Korean and Chinese tourists to Japan is attributed to the falling yen. At Japanese department stores, open-runs (purchasing goods simultaneously with the opening) involving Korean and Chinese tourists frequently occurred. Brands like Vivienne Westwood Red Label (under Japan license), Issey Miyake, and Pleats Please are representative popular brands that cannot be purchased if you do not go at opening time. A representative from Company A, which specializes in purchasing on behalf of customers in Japan, noted, “It is not easy to secure items since Chinese resellers and tourists are monopolizing them,” and added, “We have no choice but to frequently post notices about delays in securing items.”
The duty-free industry is also looking forward to an increase in foreign tourists. With the rising exchange rate, foreign tourists can now purchase Korean cosmetics or fashion products at cheaper prices than before. For example, the 240g Korean red ginseng product CheongKwanJang is reduced from $181 to $175, and Amorepacific Corporation's Sulwhasoo First Care Activating Serum Duo (90ml) is decreased from $158 to $152.
This change is due to Shinsegae, Lotte, and Shilla Duty Free recently raising the standard exchange rate applied to domestic cosmetics, fashion accessories, and food brands from 1,350 won to 1,400 won. The price in duty-free shops for domestic brand products is set based on the standard price multiplied by the fixed exchange rate. For instance, if the fixed exchange rate is 1,350 won, a product with a regular price of 10,000 won would be priced at about $7.4 in the duty-free shop, but after adjusting the fixed exchange rate to 1,400 won, it would be reduced to $7.1.
As long as Korea's image does not fall and no natural disasters occur to devastate the tourism infrastructure, it is anticipated that the number of foreign tourists visiting Korea next year will increase. The artificial intelligence (AI) model developed by Yanolja Research predicts that the number of tourists visiting Korea in 2025 will reach approximately 18.73 million, an increase of about 7% compared to the pre-COVID pandemic statistics of 2019.
Many are frowning due to the rise of the won against the U.S. dollar. Food companies, which have to import ingredients, will likely be sighing, and as a result, consumer prices are expected to rise. However, some benefit from the rising exchange rate. In the past, it was often repeated that export competitiveness would increase, but now it is worth considering that our country's tourism revenue is also increasing.
A representative from the travel industry remarked, “Our country’s image abroad has improved, and the tourism infrastructure has also greatly improved.” They added, “In the past, rising exchange rates only made us frown, but now we are fortunate to have something to lean on.” An executive from the duty-free industry also said, “We are simply grateful for our country’s idols” and noted, “I think our country has somewhat established itself as a desirable tourist destination. We are trying to seek hope in business.”