South Korea is “actively” considering filing a complaint with the World Trade Organization, said that country’s Yonhap news agency on Tuesday, over what the news outlet termed as China’s “escalating economic retaliation” against the deployment of a U.S. missile system on South Korean territory.
An investment analyst covering the casino industry said in a Monday note that reported geopolitical tensions between China and South Korea could benefit Macau by diverting Chinese tourists away from South Korea and toward the special administrative region, the only place within the People’s Republic of China where casino gambling is legal.
The China National Tourism Administration on March 3 warned Chinese travellers of potential entry visa issues when travelling to Jeju Island in South Korea. The destination, a semi-autonomous region of that country, has operated a visa-on-arrival system for mainland Chinese arriving directly via international flights or international cruise ships. Jeju also has a cluster of casino hotels that industry analysts say draw mass-market customers from China.
The Chinese tourism body’s alert “came on the heels” of an announcement that a U.S. missile system would be deployed in South Korea, stated the Monday note from David Bain of Aegis Capital Corp.
“Mainland Chinese travellers may look to Macau and other destinations as an alternative to South Korea,” the analyst wrote.
In 2016, South Korea received just over 17.2 million overseas visitors, with nearly 47 percent of the tally – or over 8 million arrivals – generated by China, according to figures published by the Korea Tourism Organization. In January this year, the country received more than 1.2 million visitors, with mainland Chinese accounting for 46.3 percent of all arrivals.
Investment analysts have noted that there may not be a correlation between the volume of mass-market Chinese tourists to South Korea and the earnings of the latter country’s 16 foreigner-only casinos. Paradise Co Ltd, which operates five foreigner-only casino gaming venues in South Korea, said in its annual results issued in February that Chinese VIP players accounted for 52.1 percent of the group’s 2016 casino drop.
China’s Tourism Administration said in its March 3 warning that China’s citizens needed to “have a clear understanding of outbound travel risk” and “have a full grasp of South Korea’s immigration policy” ahead of any trips.
“In recent time, there has been a rapid increase in cases of Chinese citizens being rejected for entry into Jeju Island, South Korea: some of these citizens that had been denied entry had a long wait for their trip back to China at the local airport,” the Tourism Administration stated in the alert posted on its website.
It added: “…China National Tourism Administration takes heed of this situation, and has lodged solemn representations regarding the related issues during meetings in Beijing with the Embassy of the Republic of Korea, and the officials stationed in China from the Korean Cultural Center and [the South Korean] Ministry of Culture, Sports and Tourism. ”
The U.S. has said its Terminal High Altitude Area Defense (THAAD) missile system is designed to make the region safer, in the face of recent ballistic missile testing by North Korea. China’s government has objected to the deployment of such a system on its doorstep and sees it as a security threat to its territory, according to media reports.
The Yonhap report – suggesting a possible complaint by South Korea to the WTO – cited the source as Lee Hyun-jae, policy chief of the governing Liberty Korea Party, an organisation known until last month as the Saenuri Party.
Yonhap further reported that some Chinese travel agencies had stopped selling tour packages to South Korea.
In October last year South Korea’s JoongAng Ilbo, a Seoul-based newspaper, had reported that Chinese travel agents had been instructed to cut by more than 20 percent the number of outbound tourists to South Korea.
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"VIP growth [in Macau] is roaring back on the heels of last year’s economic stimulus – but we think this could stall once the effect of the stimulus and the Chinese housing bubble wears off – as it did in 2013-14"
Cameron McKnight and Robert Shore
Analysts at Wells Fargo Securities