Seoul Decision In Haste Regarding THAAD (Terminal High Altitude Area Defense) Deployment & Its Impact On Local Businesses

It is clear from the information available and the drop in number of Chinese tourists visiting South Korea that the Seoul did not anticipated such a strong backlash from Beijing over the deployment of THAAD (Terminal High Altitude Area Defense).

Many Chinese tourist and some businesses are cancelling their trip to Seoul while trip operator have not cited the reasons but most likely it’s in retaliation to the deployment of THAAD. 

The immediate brunt of the impact will be on the tourism, cosmetics, retail and hotel industry. But lets not forget the fact that there are many other small businesses and livelihoods who are related and depend on it. The full impact will be not felt until later or as to when Seoul goes ahead with Deployment of THAAD; things could even get worse and spread to other sectors.

Lets not forget the staggering number of Chinese students which account for more than 70 percent of the entire foreign students here and the local universities heavily rely on them.

It is clear from this scenario and the panic among government such as the urgent meeting held by Ministry of Culture, Sports and Tourism that Seoul had not sought out plans as how to counter this fallout from drop in tourists and Beijing’s retaliation.

“I believe the decision to deploy THAAD was made in haste without giving much consideration not only to its pros & cons but what impact it would have from neighbouring countries.”

There is no doubt that Seoul should protect itself from any foreign threats but what it could have done was that held more consultations not just at home but with its concerned neighbours. Beijing and other neighbouring countries should have been taken into confidence and briefed properly as to why Seoul needs THAAD and it in no way will harm their interests also. I think so this should have been the message loud and clear. 

In any way it does not mean that Seoul should listen to Beijing or Beijing might give it a green light to go ahead with the deployment of THAAD but it would have calmed their fears and Seoul being made its point in a more clear and effective way.

We need to understand and acknowledge that retaliation about THAAD is not only about Chinese tourists but it will have a Geo-Political impact on this region. Lets not forget that there is also talk for Seoul having its own Nuclear Weapons since Trump Administration came into power and who knows what other strong and unilateral decisions Seoul has to take in future.

Yet we have to see how the Trump Administration changes its trade policy for Seoul and even a little change can have adverse effects on the local economy.

“I think Seoul is living in a fantasy world as it still believes that U.S Secretary of State Rex Tillerson’s visit to the region in March to Japan, China and South Korea may in some way negotiate the THAAD issue with the Chinese. Seoul hopes that it may help to ease the tension with Beijing.”

Even if U.S Secretary of State does in some way ease the tension there is no guarantee that the flow of Chinese tourists will start soon. Also the U.S itself is considering renegotiating its trade deals with Seoul, so how come Beijing would comply to U.S demands.

“I think Seoul relies too much on Chinese tourists and the U.S, its time it broadens its tourist base and more open to ASEAN countries and other parts of the world. Some parts of THAAD have already have been brought to South Korea on Tuesday in an earlier than expected time frame and the government is expected to make it operational by April. This may not only surprise many observers and analysis locally. It will add fuel to the Beijing-Seoul relations, which are already strained due to this.”

Lets not forget that the Government issued 3 new licenses last year to open new duty free and the duty free market is saturated enough, as there are already 9 duty free in Seoul. The new duty free are set to open in a year’s time approximately in Southern Part of Seoul to meet the growing demand of tourist in that area as per figures from Korea Tourism Organization that saw as increase in tourist numbers of approximately 19 percent from 2012 to 2015. Some duty free have already posted big operating losses. Most of the duty free rely on Chinese tourist and if the existing trend of decline in tourists continues then the outlook for these upcoming duty free does not seem bright.

Seoul needs to put all the resources its has its disposals and bring businesses into the discussion as how to counter this drop in Chinese tourist from the fallout of THAAD deployment and not only have a back up plan but to other alternatives.

The government needs to remember one thing here that when discussing such plans or implementing any strategy they should not forget the small retailers as they are more susceptible to such adverse changes as the big businesses and established retailers are able to absorb such an impact with ease while small retailers and businesses might not survive.

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