Duty-free stores delay opening

The Korea Customs Service will allow duty-free stores that received operating licenses last year to delay their opening date, the government agency said Tuesday, in response to requests from retailers for more time to adjust to changed market conditions after China banned its travel agencies from selling group tours to Korea.

Three duty-free operators ? Hyundai, Shinsegae and Top City ? will be given at least 30 more days to prepare for their launch, and they can extend the deadline upon request. The government approved their licenses last December and initially set this December as the target opening date.

The retailers have begun preparing for the launch but say they need more time to adjust their strategy to accommodate a decline in tourism from China. The Chinese government last month barred travel agencies in China from arranging group tours to Korea, which were a heavy source of revenue for duty-free stores.

The measure is said to be Beijing’s retaliatory response to Seoul’s decision last year to deploy a controversial U.S. missile shield known as Thaad, which China says threatens its national security.

The effect of the travel ban appears to have been immediate. Last month, sales at Korean duty-free stores by foreign tourists fell 29.2 percent compared to a year earlier to $170 million, according to the Ministry of Trade, Industry and Energy. Government data showed the number of visitors from China also fell nearly 40 percent compared to the previous year.

Park Hun, a director at the Korea Customs Service, said the agency would permit the duty-free stores to delay their opening date further if necessary and reduce the financial burden on operators.

“We plan to allow all duty-free stores to delay paying their mandatory fees to operate in the country for up to one year and allow payment in installments if we find their sales continue to drop,” Park said. “We will monitor closely changes in local duty-free stores’ sales and come up with further plans to minimize negative impact from the Thaad issue.”

BY KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]