Continued Purchasing of Chinese Daigou Domestic Duty-Free Cosmetics in August

August Domestic Duty-Free Total Sales
1.4441 Trillion KRW... 15.4% Increase from Previous Month
Both Foreign and Domestic Sales Rise

[Asia Economy Reporter Cha Min-young] Domestic duty-free shops have sustained a sales recovery trend for four consecutive months through August. This is attributed to the influence of Chinese daigou shoppers, who are major customers of duty-free shops, and domestic business travel demand.

According to the Korea Duty Free Shop Association on the 29th, total sales at domestic duty-free shops in August amounted to 1.4441 trillion won, an increase of 192.5 billion won (15.4%) compared to 1.2516 trillion won in July. This marks the fourth consecutive month of rebound since the sales fell below the 1 trillion won mark in April (986.7 billion won).

Foreign customer sales in August reached 1.3834 trillion won, rising by 181.3 billion won from the previous month. The increase also surpasses the 135.6 billion won growth seen from June to July. The number of foreign customers was 75,037, up by 4,797 from the previous month. Domestic sales also rose by 11.2 billion won to 60.7 billion won from 49.5 billion won in the previous month.

The relatively large increase in sales to foreigners is largely due to the rise in Chinese daigou shipments. With the allowance of overseas third-country exports, daigou shoppers have become more mobile and, buoyed by the recovery of China's domestic market, have increased their purchases of cosmetics.

Domestic sales are believed to have been boosted mainly by temporary long-term inventory domestic sales permitted by the Korea Customs Service. These domestic sales are scheduled to end on October 29, as originally planned. Additionally, signs of revived inbound and outbound demand for business purposes, such as domestic and international business travelers, have been observed.

An Ji-young, a researcher at IBK Investment & Securities, analyzed, "With the ongoing end of COVID-19 in China and the Ministry of Land, Infrastructure and Transport's announcement in July to double the existing Korea-China air routes, the number of Chinese arrivals has increased. Since August, global luxury cosmetics brands have launched new products and raised prices, which appears to have increased the volume of overseas third-party returns."

A representative from a major domestic duty-free shop said, "Visits by daigou shoppers to Korea continue to increase, and with the increase in Korea-China international flights, their movements have become freer. Domestic sales also seem to have slightly increased due to revenue from domestic sales of existing duty-free inventory and sales from visitors at the Incheon Airport store."