Fears of Chinese backlash
over missile defence hit South Korean firms
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[March 03, 2017]
By Hyunjoo Jin and Adam Jourdan
(Reuters) - South Korean companies on Friday bore the brunt of a
perceived backlash from China over the deployment of a U.S. missile
system outside Seoul, with shares tumbling on media reports of Beijing
telling tour operators to stop selling trips to the country.
Several of Korea's biggest news outlets cited unidentified sources as
saying Chinese government officials had given the verbal guidance just
days after the Seoul government secured land for the missile system from
South Korea and the United States say the missile system is defence
against nuclear-armed North Korea, but China says its territory is the
target of the system's far-reaching radar. To protest the deployment,
Chinese state-run media have called for a boycott of South Korean
The Chinese are by far the biggest spenders in South Korea's tourism
industry, propping up the world's biggest duty free market which
generates about $8 billion in annual sales.
But on Friday, the price of shares in duty free retailer Hotel Shilla Co
Ltd ended 13 percent lower while cosmetics maker Amorepacific Corp
closed at a two-year low, as investors feared a decline in Chinese
tourist dollars as well as a repeat of a backlash against Japan in 2012
over a territorial dispute and interpretations of history.
The share falls add to difficulties reported by South Korean companies
in China since the Seoul and Washington governments in July agreed to
deploy the Terminal High Altitude Area Defense (THAAD) system. On
Thursday, an affiliate of the Lotte Group reported cyber attacks
ostensibly originating from China.
Shares of Hyundai Motor Co also finished down 4.4 percent after photos
of a vandalised Hyundai car circulated on Chinese social media, in an
echo of the damage meted out to Japanese vehicles during protests in
Local police in a microblog post said the vandalism could be linked to a
dispute over debt.
"If it is proved to be related to (the missile issue), such illegal
behaviour is a smear on the public boycott campaign," state-run tabloid
Global Times said in an editorial.
South Korea's embassy in China issued a safety warning for its citizens.
Chinese foreign ministry spokesman Geng Shuang on Friday said there was
no anti-deployment movement in China, and that authorities would deal
with anyone breaking the law.
"I hope the relevant side can listen to the people's voices and
earnestly take steps to avoid further damage to China-South Korea
relations and exchanges and cooperation between the two countries," Geng
STAB IN THE BACK
South Korean foreign minister Yun Byung-se said he was reviewing whether
the guidance mentioned in the media violate international norms, Yonhap
News Agency reported.
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A currency dealer works at a dealing room of a bank in Seoul, South
Korea, August 25, 2015. REUTERS/Kim Hong-Ji
such reports are true, it would be an unfair action ... and very regrettable,"
the foreign ministry said earlier on Friday.
An official at South Korea's culture ministry said Korean tour operators had
reported that Chinese peers had told them of the guidance to stop selling tours.
A Korean tourism official later told Reuters that the China National Tourism
Administration (CNTA) had told tour operators in Beijing and beyond that all
group tours to South Korea as well as advertising were banned. The official also
said group tours made up about 40 percent of all Chinese visitors to South Korea
CNTA did not immediately respond to a request for comment.
Chinese operators Ctrip and Qunar were accepting bookings to Korea on Friday. A
salesperson at LY.com said the site has withdrawn all Korean tours, and Tuniu
declined bookings citing the missile issue. LY.com could not be reached for
comment, and Tuniu's spokesperson did not immediately respond to comment.
number of Chinese tourists to South Korea has nearly quadrupled to 8 million
over the past five years, accounting for nearly half of foreign visitors, Korean
government data shows.
Yet shares of flag carrier Korean Air Lines Co Ltd also ended down on Friday, by
4.8 percent. A spokesman said the airline was worried about the reports and was
monitoring the situation.
South Korean political parties condemned the action.
"It's despicable and arrogant. China is a G20 nation that should be leading the
development of world order," Liberty Korea Party leader Chung Woo-taik said.
But for Professor Wu Xinbo at China's prestigious Fudan University, the
deployment was akin to "stabbing China in the back".
"As a sovereign nation, Korea says its decision to deploy THAAD is out of
consideration for national security," Wu told the Global Times. "By the same
logic, China has the right to oppose THAAD on the basis of its own national
(Reporting by Hyunjoo Jin in SEOUL and Adam Jourdan in SHANGHAI; Additional
reporting by Joyce Lee, Jack Kim, Ju-min Park and Se Young Lee in SEOUL, Ben
Blanchard and Muyu Xu in BEIJING, and Christian Shepherd in HONG KONG; Editing
by Stephen Coates and Christopher Cushing)
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