Teddy bears and K-Pop stars feel brunt of China missile spat

[chahlley]

(Asia Today Tuesday 7 March 2017)

Teddy bears and K-Pop stars feel brunt of China missile spat

South Korean singer Psy performing his hit Gangnam Style. Reuters file photo

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Published: 7:55 AM, March 7, 2017

SEOUL — Even teddy bears and K-Pop stars are feeling the effects of the diplomatic strain between South Korea and China.

On the Korean resort island of Jeju off the southern tip of the Korean peninsula, about 85 per cent of the foreign visitors last year came from China. They piled into tour buses to see such sights as a botanical garden, a teddy bear museum and a hall full of singing holograms.

That was before South Korea decided to host the Thaad missile-defence system in conjunction with the US China views Thaad as a security threat and began to discourage Chinese tourists from taking Korean vacations.

“We’ve seen about a 20 per cent decline in Chinese tourists so far this year,” said Mr Byun Chang-sik, a general manager at the Jeju Teddy Bear Museum, where the stuffed animals strike poses resembling The Beatles and Mona Lisa. “There’s nothing we can fix on our own.”

Worse is to come. The China National Tourism Administration ordered travel agents to stop selling tour packages to South Korea starting March 15, according to the state-run Korea Tourism Organisation. Jeju received almost 3.1 million Chinese visitors last year.

“This will strike a fatal blow,” said Mr Won Hee-ryong, governor of Jeju Special Self-Governing Province. Bus-rental companies, hotels and travel agencies will suffer along with the tourist attractions, he said.

GANGNAM STYLE

The Chinese reaction is thinning crowds at an attraction dedicated to Korean pop music, one of the nation’s most prominent soft-power exports. The Play K-Pop museum opened in 2015 and features a concert hall for singing holograms, as well as selfie-taking areas with images of famous singers including the artist known as Psy, who released the 2012 international hit Gangnam Style.

The museum was welcoming about six or seven Chinese tour groups a day, said Mr Kang Oh-hyun, a museum official. “We’ve suffered direct damage,” Mr Kang said. “It is hard to receive even a single Chinese group-tour bus these days.”

The effects of the spat are also being felt on the Korean mainland. China’s major internet-streaming companies pulled popular Korean programmes, which can include soap operas and historical dramas, off their platforms, China’s state-run Global Times newspaper reported March 5.

Government pressure could eventually hurt sales of Korean cars, mobile phones and chemicals, said Mr Kim Kyung-hwan, a strategist at Hana Financial Investment Co in Seoul. China is the largest market for Hyundai Motor Co., according to data compiled by Bloomberg.

“We’re estimating a 5-to-10 per cent decline in exports to China,” Mr Kim said, speaking of the overall market and not just cars. “Even if China withdraws all the restrictions, it will take six months to a year for things to improve.”

JAPAN LESSON

When China was locked in a dispute with Japan in 2012 about competing claims to uninhabited islands near Taiwan, angry Chinese took to the streets, attacking Toyotas and Japanese-branded stores.

Japanese automakers’ sales in China took a year to recover. The Philippines and Taiwan also have experienced the economic wrath of the Chinese government.

“China is more and more interested in using the power of the purse of its consumers as a force-multiplier for its diplomatic pressure,” said Dr James Reilly, associate professor in the University of Sydney’s department of government and international relations.

The US-operated Thaad system, intended to counter a potential North Korean missile attack, will be installed in South Korea on land provided by the Lotte Group conglomerate. North Korea fired four ballistic missiles early Monday. China says the system would upset the region’s military balance and risk undermining its own security.

After the announcement, Lotte’s Chinese website was hacked, and Chinese authorities suspended the operations of 23 Lotte Mart stores because of alleged fire-safety rule violations, according to Yonhap News. Shares of unit Lotte Shopping Co have declined more than 9 per cent since the government disclosed the land deal Feb 27.

South Korea’s trade minister said March 5 the country would take legal steps if China violated World Trade Organisation or Korea-China free-trade agreements.

Consumer companies whose products can be replaced easily by other brands also are suffering. About half of South Korean cosmetics makers’ profits come from sales in duty-free shops popular among Chinese travelers, said Ms Catherine Lim, a Bloomberg Intelligence analyst in Singapore.

‘DARK TUNNEL’

Seoul-traded shares of Amorepacific Corp, which makes Laneige cosmetics and Ryo hair-care products, fell to a 52-week low on Monday, extending their decline to 19 percent so far this year. The benchmark Kospi index has risen 2.7 per cent.

South Korea also is a destination for Chinese tourists seeking medical procedures like nose jobs, eyelid surgery and dental implants.

Osstem Implant Co’s China sales in the fourth quarter were an estimated 16.9 billion won (S$21 million), or about 18 percent of total revenue, according to Shinhan Investment Corp. Shares plunged to a 52-week low on March 3 and have declined 12 per cent this year.

Down the street from Jeju’s Teddy Bear Museum, septuagenarian restaurant owner Jeong Jong-soo is bracing for worse to come after China implements the new travel restrictions on March 15.

“We cannot endure this situation for long,” she said. “I feel I am walking through a dark tunnel.” BLOOMBERG