China's Golden Week Approaches... Duty-Free Shops Battle to Attract Youke Visitors

Discount Linked to China's Simplified Tax Payment System
Marketing Featuring K-Pop Group Models

The domestic duty-free industry has officially started promotions to welcome Chinese group tourists (Youke). Targeting the upcoming Mid-Autumn Festival and National Day golden holidays next month, which are considered the first peak season since the allowance of Chinese group tours, this is interpreted as the beginning of the competition to attract Youke.

Chinese tourists who arrived at the Incheon Port International Passenger Terminal in Yeonsu-gu, Incheon, where international passenger ferry services between Korea and China have resumed, are moving around.

According to the industry on the 23rd, Shinsegae Duty Free has decided to offer discount benefits of up to 225,000 KRW to users of the Chinese mobile payment platform 'WeChat Pay' who activate the Shinsegae Duty Free exclusive points solution or make payments through it until the end of next month. This collaboration with WeChat Pay comes as many Chinese group tourists are expected to visit Korea during the Mid-Autumn Festival and National Day golden holidays (September 29 to October 6).

A Shinsegae Duty Free official said, "We have been collaborating with WeChat Pay as good partners," adding, "With the resumption of Chinese group tours and the approach of the golden holidays, we plan to operate various benefits and promotions more actively." Shinsegae Duty Free is also running an exclusive summer promotion with WeChat Pay this month, and it is known that about 20 WeChat Pay facial recognition devices are already installed at the Myeongdong branch.

Hyundai Department Store Duty Free also plans to apply an immediate 5% discount for one month starting from the 15th of next month when using Chinese-specific simple payment methods such as Alipay and UnionPay. Additionally, they are reportedly considering a plan to match duty-free membership levels with Alipay and WeChat Pay tiers to provide instant discounts based on purchase amounts. Hyundai Department Store is expanding its marketing efforts by selecting NewJeans, a globally representative K-pop girl group, as a model targeting the global MZ generation (Millennials + Gen Z), including China.

Lotte Duty Free is also preparing discount promotions linked with payment systems such as Alipay and UnionPay, with implementation likely next month. Shilla Duty Free has not yet announced specific promotion details but is internally preparing special promotions focusing on products highly favored by Chinese customers, such as luxury fashion and alcoholic beverages.

Earlier, the duty-free industry began preparations for the return of Youke as China decided to allow its citizens to travel to Korea in groups. They installed dedicated desks for Chinese group tourists and started developing group tour products linked with major tourist facilities. An industry official said, "The Mid-Autumn Festival and National Day golden holidays next month will be an important turning point for the normalization of tourism between Korea and China," adding, "Although some time is needed for product development and customer recruitment preparations, we plan to thoroughly prepare to welcome customers during the remaining period."

The Mid-Autumn Festival and National Day golden holidays are also expected to be a gauge for the speed of recovery in the industry's third-quarter performance. Having suffered a direct hit from the COVID-19 crisis and experienced a performance cliff, the duty-free industry has eagerly awaited the return of Chinese group tourists, who are major spenders. According to the Korea Duty Free Association, the number of foreign visitors to domestic duty-free stores last year was 1,563,046, about one-tenth of the 20,161,150 in 2019 before COVID-19. During the same period, foreign sales also sharply declined by 21.3%, from 20.8129 trillion KRW to 16.3901 trillion KRW.