As President Lee Jae-myung pays a state visit to China from the 4th to the 7th, the domestic retail industry is closely watching for signs of improved South Korea-China relations. Hit hard in the past by China's "THAAD retaliation" and the resulting ban on Korean cultural content (hanhanryeong), which forced sweeping cutbacks in local offline operations, retailers are now turning their attention back to the Chinese market, particularly in segments such as fashion and tourism.
However, even if relations between the two countries improve, political and diplomatic variables remain, and given the sluggish retail economy, some say it will still be difficult for large corporations such as Lotte and Shinsegae to reenter China's offline market.
According to the business community and the presidential office on the 5th, South Korea and China plan to broaden cooperation by signing more than 10 memorandums of understanding (MOUs) across the economy and industry during the president's state visit. A 200-member business delegation, including the heads of the four major conglomerates—Samsung, SK, Hyundai Motor, and LG—joined the trip. From Lotte Group, Jung Seung-won, CEO of LOTTE Fine Chemical, accompanied the delegation in place of Shin Dong-bin, and from Shinsegae Group, Jang Seung-hwan, CEO of Gmarket, also joined, according to reports.
The retail sector is watching closely to see where bilateral relations head following the visit. Retail corporations took a direct hit from the Chinese government's economic retaliation over the past THAAD deployment. Lotte Group is the most prominent example.
In September 2016, the South Korean government designated a Lotte golf course in Seongju-gun, North Gyeongsang Province, as the THAAD site, and Lotte swapped the land with a military site in Namyangju held by the Ministry of National Defense. In response, starting in November the same year, the Chinese government ramped up pressure by simultaneously carrying out high-intensity tax audits, hygiene and safety inspections, and fire safety checks on Lotte affiliates operating in China, including LOTTE Wellfood (formerly Lotte Confectionery), Lotte Mart, and LOTTE Chemical.
The following year, the Chinese government ordered business suspensions for 74 of the 112 Lotte Mart and supermarket stores in China. Of the remaining stores, 13 voluntarily closed due to sluggish sales caused by boycotts. When the suspensions, initially seen as temporary, were not lifted for more than a year, Lotte ultimately had no choice but to shut down its local hypermarket business entirely.
Emart of Shinsegae Group also had a bitter experience in China. Emart became the first among domestic big-box retailers to enter the Chinese market when it opened its first Shanghai store in 1997 and at one point expanded to 26 stores in 2010. However, as losses mounted due to localization failures, it gradually reduced its footprint and, amid the 2017 THAAD retaliation, withdrew its remaining six stores, completely exiting China after 20 years.
Recently, the domestic retail industry has again focused on China, particularly in certain markets such as fashion and tourism. Musinsa opened a Musinsa Store and Musinsa Standard in Shanghai in December last year, entering the Chinese offline market. Musinsa has also announced additional openings in three areas—Nanjing Road East, Xujiahui, and Hangzhou—in the first half of this year, with a goal of expanding to more than 100 domestic stores over the next five years.
Hyungji Fashion Group also operates fashion businesses such as school uniforms in China through Hyungji Elite. Recently, it signed an MOU with COSMAX and announced a push into China's beauty market. Musinsa and Hyungji Fashion Group were both named to the current business delegation.
The tourism and duty-free industry has warmed since the visa-free entry program for Chinese group tourists took effect in September last year. According to the "November 2025 Korea tourism statistics" released last month by the Korea Tourism Organization (KTO), about 378,000 Chinese tourists visited Korea in November last year, up 26.9% from a year earlier. The number of Chinese tourists has recovered to about 75% of the level in November 2019, before COVID-19.
At Shinsegae Duty Free's Myeongdong store, the number of Chinese visitors surged 90% year-over-year within a month of the visa-free program taking effect, and sales rose 40%. The hotel and casino industries are also raising expectations for improved results. Samjong KPMG said in a recent report that "if Chinese inbound travel expands, the occupancy rate and average daily rate in Seoul's tourist hotel market will rise in tandem, which will simultaneously drive improved investment returns and higher asset values."
However, with political and diplomatic variables ahead, there is also caution against excessive expectations because the ban on Korean cultural content could be reinstated at any time. Given the slump in the domestic retail economy, some say it will be difficult for major retail companies to reenter China's offline market as they did in the past. A retail industry official said, "Global giants such as Carrefour and Walmart have already exited China," adding, "the likelihood of Korean retail majors reentering China is low."