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The Peninsula

Is Trouble Bubbling Under the Surface of South Korea’s Tourism Boom?

Published April 25, 2016
Author: Jenna Gibson
Category: South Korea

By Jenna Gibson

Walking down one of Seoul’s many shopping streets, sandwiched between food carts and two-story portraits of the latest k-pop phenom, store clerks hover, calling out to the crowds as they pass by in various foreign languages. “Ohayo gozaimasu! Nihao! Hello! Come in! Big sale today!”

They know their audience – tourists in South Korea, especially those from nearby Japan and China, are spending a huge chunk of their time – and money – stocking up on popular Korean products. According to new numbers from the Korea Culture and Tourism Institute, tourists visiting South Korea spent 5.5 trillion won (around $4.8 billion) on shopping in 2015. That’s 52.8 percent of the total 10.4 trillion won foreigners spent on travel in Korea last year. This was followed by lodging at 23 percent, food at 8 percent, and medical at 3.9 percent.

Korea Tourists Graph

Interest in Korean products, especially in the cosmetics industry, can be directly attributed to the popularity of the popular actors and singers who smile out from nearly every shop window. According to a recent survey of foreigners in Seoul’s busiest shopping neighborhoods, more than two thirds said they became interested in Korean cosmetics products after “getting to know Korean dramas or K-pop stars.” This led the study’s author to conclude that “Interest and affection for Korean culture, or hallyu, has a direct correlation to growth in the cosmetics industry.”

According to the Gangnam District Office, which oversees the k-pop mecca of Seoul, use of Chinese UnionPay cards in the Cheongdam-dong neighborhood jumped from 5.2 billion won in 2012 to 26.3 billion won in 2014, a five-fold increase.

In a more shocking example, after a Korean boy band member mentioned Ryeo Shampoo on a Chinese reality program, the brand’s sales skyrocketed 630 percent. The shampoo’s domestic sales also increased by 300 percent at the time – its manufacturer, AmorePacific, attributed this increase to Chinese tourists stocking up while in Seoul.

But this reliance on the whims of hallyu fans, coupled with some recent scandals about shoddy tour services, indicate that trouble may be bubbling under the surface for the Korean tourism boom.

Doubling Down on Hallyu

To fully capitalize on the influx of k-culture fans visiting South Korea, the government is trying to introduce new ways to connect with their favorite songs and TV shows – and spend more tourist dollars in the process.

Gangnam, a neighborhood in southern Seoul, is leading the charge. Gangnam’s Cheongdam-dong area is home to the headquarters of many of the major entertainment companies, and is notorious among for hallyu fans for celebrity spotting. “This place is packed from morning to night with foreigners who want to spot K-pop stars,” a worker at a Cheongdam-dong café told the Korea Joongang Daily.

The Gangnam District Office aims to capitalize on this interest through several new projects – from renaming a major street “K-Star Road” to unveiling a gargantuan statue in the shape of Psy’s hands that automatically plays “Gangnam Style” when visitors walk by.

All of this is about bringing hallyu tourists – and their wallets – to Gangnam. “Every fourth Friday of the month we plan to block a part of 79 Apgujeong Road that passes the JYP Entertainment building to host K-pop concerts and souvenir pop-up stores, developing the region into a ‘K-pop special economic zone,’” Park Hee-soo, head of the tourist industry department at the Gangnam District Office, told the Korea Joongang Daily.

Gangnam is not alone. Paju, a city north of Seoul, has announced that they will be turning Camp Greaves, a former U.S. military facility where parts of the ultra-popular drama “Descendants of the Sun” was filmed, into a tourist destination. This move is likely trying to repeat the success of Namiseom, a small island that experienced a spike in visits after being featured in the k-drama classic “Winter Sonata.” Even now, more than a decade after the show aired, the island gets 3 million visitors a year (up from 270,000 in 2001, prior to the Winter Sonata craze).

Quality over Quantity?

But some have been overzealous in their efforts to attract tourists. A recent scandal exposed the background of some Korean travel agencies that target Chinese tourists. Because of the intense competition to serve the increasing number of Chinese visiting Korea each year, some agencies have resorted to paying Chinese travel agencies a commission to secure customers while slashing prices. This results in tour packages that include cheap hotels, low-quality restaurants…and plenty of trips to the mall.

To make up for lost costs from tour packages, these tour companies make deals with shop owners to get a commission from sales. In some cases, the Joongang Daily discovered, Chinese tourists were brought to six shopping malls in just two days.

These issues have the serious potential of souring Korea’s reputation as a tourist destination. One local newspaper in China covered the issue in an article titled “Korean tourism Ends up Being Pathetic,” telling the story of a travel guide who wouldn’t let the tour bus leave a shopping center because the passengers didn’t spend enough money.

“The cheap group tours are not only unprofitable but also hamper the national image, which could cause damage in the long-term. We have to change the tourism paradigm to focus on value-added programs,” an official from the culture ministry told Yonhap News.

The Korean government is working to address this issue. The Ministry of Culture, Sports and Tourism has started cracking down on these tour package programs, dealing with 6,175 complaints in 2015 and revoking the license of 68 tour operators for “offering unreasonably cheap tour programs and hiring unqualified tour guides.”

It’s possible the industry can ride high on the Korean Wave for quite some time – skeptics have been predicting the death of hallyu almost since its inception and it has only continued gaining strength. However, rather than investing so much in a potentially fleeting trend, the Korean government needs to take a serious look at diversification. As Lee Hun, a professor at Hanyang University, told Yonhap News, “It is time for the tourism industry to shift priority from quantity to quality.”

Jenna Gibson is the Director of Communications at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Rolf Venema’s photostream on flickr Creative Commons.

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