Duty-Free Industry Prepares for Surge in Chinese Tourists Ahead of Visa-Free Entry

Lotte and Shilla Duty Free Collaborate with Chinese State-Owned Duty Free Group
Enhancing Products to Attract Group and Individual Tourists

With growing expectations that temporary visa-free entry for Chinese group tourists will be permitted in the third quarter, the duty-free industry is increasingly hopeful for a surge in business from Chinese visitors. In preparation for a potential influx of Chinese tourists, duty-free operators are working to enhance their product competitiveness to attract these travelers.

According to the duty-free industry on June 19, the government is planning to allow temporary visa-free entry for Chinese group tourists in the third quarter. Earlier this year, the government announced its intention to open visa-free entry for Chinese group tourists as a reciprocal measure to boost inbound tourism, following the Chinese government's unprecedented decision in November last year to permit visa-free entry for Korean nationals. The government plans to broadly open visa-free entry for Chinese group tourists, regardless of their entry routes.

The duty-free industry believes that if temporary visa-free entry becomes possible, the number of Chinese tourists could increase significantly. To strengthen product competitiveness, companies are collaborating with Chinese duty-free distribution firms. On the afternoon of June 18, Lotte Duty Free held a business meeting at its headquarters in Jung-gu, Seoul, with executives from China Duty Free Group (CDFG) and its parent company, China Tourism Group, to discuss revitalizing the duty-free industry. Key participants included Namgoong Pyo, Head of Marketing Division at Lotte Duty Free, and Liu Kun, Deputy General Manager of China Tourism Group. The two companies shared know-how on duty-free store operations and discussed exchange and cooperation in tourism sectors such as hotels and tourist attractions.

CDFG, established in 1984, is the largest duty-free distribution company in China. It operates the world's largest duty-free store on Hainan Island, a major Chinese tourist destination, and ranked first in global duty-free sales in 2022 and second in 2023, according to the UK-based duty-free magazine The Moodie Davitt Report.

Lotte Duty Free is enhancing its content competitiveness to attract both group and individual tourists (FIT). The company is developing travel products that combine shopping and tourism, such as beauty classes and K-content experiences, in cooperation with inbound travel agencies. It also plans to introduce experiential content in major commercial districts where foreign tourist inflow is expected to be concentrated.

Namgoong Pyo, Head of Marketing Division at Lotte Duty Free (right), and Liu Kun, Deputy General Manager of China Tourism Group (left), pose for a commemorative photo after a business meeting. Provided by Lotte Duty Free.

Namgoong Pyo, Head of Marketing Division at Lotte Duty Free, stated, "It was a meaningful opportunity to meet directly with CDFG, the largest duty-free company in China, to explore possibilities for cooperation between our companies and to discuss the future of the industry. As we anticipate improved Korea-China relations, we look forward to even more active exchanges in the future."

Shilla Duty Free is also focusing on attracting Chinese group tourists by discussing cooperation measures with China Tourism Group, the parent company of CDFG.

Shilla Duty Free is working with local Chinese travel agencies to attract MICE and incentive groups. Its initiatives include broadcasting welcome events on a large VOID LED screen, providing welcome gifts such as Gold Passes, hosting group events and offering exhibition space, expanding its merchandise lineup to focus on brands popular with Chinese tourists, and offering customized content through its local office in China. The company is also actively planning marketing campaigns to attract large group customers, such as K-POP fan meetings. In addition, it is developing and promoting linked products suitable for day tours or small-scale individual travel. In April, Shilla Duty Free appointed Jinyoung, a former member of B1A4 who is active globally, especially in the Chinese-speaking world, as its promotional model.

A representative from Shilla Duty Free said, "By reorganizing the shopping environment and establishing specialized programs for group tourists, we are solidifying our role as a hub for group tourists at downtown duty-free stores. As we expect an increase in inbound tourists starting in the third quarter, we will further strengthen our marketing activities."