SEOUL (AFP) - South Korea's tourist industry has been hammered by China's boycott over the deployment of US missile defence system, with visitor numbers from the Asian giant plummeting 40 per cent in March, statistics showed.
Beijing banned Chinese tour groups from visiting the South from March 15 in a spat over the US Terminal High Altitude Area Defence (Thaad) system.
Washington and Seoul say it is for purely defensive purposes, but Beijing fears it could undermine its own nuclear deterrent and has reacted with fury, imposing a series of measures seen as economic retaliation.
Normally more than half of tourists to the South are from China, but little more than 360,000 visited last month, compared to just over 600,000 a year earlier.
Total visitor numbers fell 11.2 per cent year-on-year to 1.23 million, the state Korea Tourism Organisation (KTO) said.
The falls in tourism from China have also dealt a blow to duty-free shops in South Korea, with Chinese customers accounting for 70 per cent of their total sales, a Lotte spokesman said.
Lotte Duty Free has seen sales to Chinese customers fall 40 per cent on-year since the group tour ban in mid-March.
The South Korean retail giant has had to shut down 85 of its 99 stores in China due to boycott calls after the group agreed to provide a golf course in South Korea as a site for Thaad.
Its accumulated losses as a result are reportedly expected to hit US$1 billion (S$1.13 billion) in the first half of this year alone.
South Korea has been struggling to fill the gap with promotion campaigns to attract more visitors from other countries, mainly from Japan and those in South-east Asia.
But rising regional tensions over the nuclear-armed North have nipped in the bud an increase in the number of Japanese travellers.
Yonhap news agency said a tourism ministry tally showed Japanese visitors rising some 20 per cent year-on-year up to early April, but the growth rate fell to between 2 and 3 per cent after tensions spiked.
"Japanese tourists are putting off their trips to this country, apparently because of overblown Japanese media reports about tensions on the Korean peninsula," Yonhap quoted a KTO official as saying.