NEWS ROUND-UP Korean retailers hopeful of China economic sanctions lift
South Korean travel retailers have reacted with caution following the news that China is set to lift economic restrictions on South Korean companies in place due to the THAAD missile issue. According to local media reports verified
by TRBusiness, Chinese State Counsellor Yang Jiechi has said there would be ‘tangible results in the near future’. As extensively reported, China’s so-called
‘retaliatory’ measures to the THAAD issue have included a ban on Chinese group tours to South Korea. This has severely impacted the South Korean DF&TR Industry. A Shilla spokesman told TRBusiness: “Generally, the news itself is good and
creates a sense of hope, but it is rather difficult to expect an instant return of Chinese travellers. “It may take another quarter or semester
to witness an actual increase in the number of Chinese travellers in South Korea. “The recovery of the Chinese inbound
market needs more time even once the economic restrictions are actually lifted. “The impact will be realised gradually.
We need to observe the changing climates in mainland China to see what we call ‘real and meaningful change’ and once we have evidence of these changes we can think about being optimistic.” Pressed by TRBusiness on how the retailer
thinks things will actually pan out, the spokesperson added: “I am unsure. Shilla anticipates many things but only a few will actually transpire . “Firstly, we must see if Chinese overseas
travel agencies resume marketing South Korean travel packages. “There are also other variables to consider
such as the flight schedules of Chinese carriers and marketing allowances in mainland China.” A Lotte Duty Free spokesperson added:
“From our perspective, it is welcome news, but we must wait and see if the backlash is
actually lifted. “There may be extra conditions to be
added so we will not be too optimistic just yet. The group tours are still banned, meaning the [group tour] packages are not being sold and flights are not being chartered to prepare for them. We just hope to see ‘tangible results’ soon.”
KAC gives 30% airport rent reductions; new duty free contract arrangement
Korea Airports Corporation (KAC) has told TRBusiness it gave 30% rent reductions to retailers at four airports – Jeju, Chongju, Muan and Yangyang last year for four months until 1 March 2018. Hanwha Galleria secured two
contract extensions after requesting to terminate its duty free contract at Jeju International Airport in August 2017 due to financial difficulties. The first extension was until 31 December
2017 and second until 28 February 2018. In both instances, Hanwha Galleria paid no fixed rental fee and just a share of revenue. Shilla Duty Free is now the incumbent. This new rental structure followed the
introduction of KAC’s ‘duty free operator revenue sharing contract arrangement’ in 2017. The Hanwha contract extensions were
partly down to KAC’s new role in evaluating duty free shop bids and approving
last year so we discounted their rental fees. We think they are recovering slowly,” commented Kim. She added: “We have extended the
discount period using the same percentage, but not decided how long for. “Additionally, we have delayed
rental payment date until [passenger] traffic recovers.” KAC’s concession fee discount only
concession awards to new operators. Kim Su Min, Commercial Facilities Team
Assistant Manager, KAC (pictured) told TRBusiness: “SME duty free operators in three other airports were awarded a reduction in duty free concession fees after notifying KAC of financial difficulties. “Some duty free shops faced hard times
applies to operators with a fixed sum concession fee contract, noted kim [this excludes Shilla Duty Free, which has a revenue sharing contract with KAC to run Jeju Airport’s international departure shop]. “In the past, operators offered a fixed
sum when they bid for an airport duty free shop licence,” said Kim. “Now it’s a percentage of revenue. “The actual revenue sharing concession
fee paid depends on which is higher,” Kim explained.
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