BizChina

Following the diplomatic spat that flared up between China and Japan after a Chinese fishing vessel collided with Japanese coast guard ships near a group of islands claimed by both nations, the number of Chinese tourists visiting Japan has plummeted, much to the chagrin of tourism authorities and retailers, who previously had projected a record number of Chinese to visit Japan this year. This June, Jing Daily reported that Japanese tourism officials expected an “explosion” of Chinese tourists this year, following the easing of visa restrictions that took effect July 1 and would have brought an estimated 150,000 extra Chinese visitors annually.

However, in the wake of the Senkaku/Diaoyu island clash and resulting protests on both sides of the East China Sea, one thing that has been largely overlooked in the travel industry is that the outbound tourists who had planned to visit Japan this fall still want to go somewhere, and in many cases that “somewhere” has become South Korea.

As Malaysia’s Bernama news recently reported, Korea–famous for its “Korean Wave” of cultural exports–is seeing a growing “Chinese wave” of tourists, lured by Korea’s proximity to China, its luxury-friendly atmosphere, the appeal of its television shows and films, and high-end shopping. Even before last month’s diplomatic spat with Japan, Chinese tourist-shoppers in Korea had increased exponentially in recent years, with these shoppers outspending Japanese tourists 2-to-1 at luxury shopping malls last year. According to figures released by the official Korea Tourism Organization, Chinese tourists also outspend Japanese in general, spending US$1,547 each on average, compared to the $1,084 spent by individual Japanese tourists. In addition to outspending Japanese tourists, however, in the last two months, Chinese arrivals in South Korea may have outnumbered those from Japan. From Bernama:

“We have yet to receive statistics for September, but I heard tourism to Japan has dropped significantly,” said Choi Hyo-jung, a publicity official at the China National Tourism Administration’s branch in Seoul. “Korea may have surpassed Japan in terms of tourist arrivals from China.

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The number of visitors from China has grown at a surprising pace in South Korea in recent years — as much as 45 percent year-on-year during the January-August period — prompting Korea’s tourism industry to shift its marketing focus from Japan to the world’s most populous country.

Stores in shopping districts like Myeongdong have added Chinese-speaking staff, their headquarters are using Korean celebrities popular across China and Southeast Asia in advertisements, and glitzy duty-free stores are dropping European luxury brands to give more space to Korean cosmetics chains that are less expensive but more popular in the Asian region.

The potential for more Chinese tourists in South Korea is huge, barring any unforeseen diplomatic rows that could flare up in the future. Last year, 1.3 million Chinese tourists visited South Korea, a significant rise over the 1 million who visited in 2007 and 710,000 in 2005. Driven by the Japan dispute, “Golden Week” and a stronger yuan, the growth rate has risen steeply in the last few months.

Some 1.34 million tourists from China visited South Korea last year, compared to 1.07 million in 2007 and 710,000 in 2005. The growth rate has been even steeper this year, with 1.26 million already counted as of August. In response to the increasing number of Chinese tourists — particularly wealthy tourist-shoppers who have buoyed the Korean cosmetics industry this year — the Korea Tourism Organization will introduce its “Korea Travel Card” to high net-worth Chinese tourists this December. In addition, more Korean retailers will begin accepting UnionPay and other Chinese cards, much as their Japanese counterparts have, in the coming year.

“Foreigners have an out-dated misconception about Chinese-made products,” Mr. Li begins as I lean forward in his car to listen closely. “Foreigners believe that all Chinese products are poor quality and inexpensive. But this just isn’t the case anymore. This is what I am going to show you today, and what our company is going to show the world.” We pull into a large parking lot facing three giant connected buildings. We have arrived in Yiwu, the self-proclaimed commodities capital of China.

I first heard about Yiwu, a city with a population of about 1.2 million in China’s Zhejiang province, from the Greater China head of a large multinational e-commerce company. He had just returned from a day trip there, and I could tell from the excitement in his voice that the marketplaces of Yiwu were unlike those anywhere else in China. I waited eagerly for months until I had the opportunity to visit. Finally, during a brief stay in Hangzhou, I reached out to an old friend to make introductions to set up an ‘insiders tour’ of the city.

The public battle between Chinese Internet giant Tencent and antivirus software company Qihoo 360, referred to by some as “small gang” (Qihoo 360) vs. “mafia” (Tencent), has led to a spike in new users for other firms, including one of Tencent’s chief rivals, Microsoft.

New user signups in China for Microsoft’s MSN Messenger, a competitor to Tencent’s leading QQ instant-messaging service, have gone “from tens of thousands normally to millions” per day since a flare-up between the two Chinese companies began, a person familiar with the situation said.

The conflict, which appears to have ignited two months ago when antivirus software company Qihoo 360 alleged that Tencent’s QQ was scanning the private data of its users and released software claiming to block plug-ins that could cause such privacy leaks. Tencent denied the allegations, then discontinued its services to QQ users who were also using Qihoo 360’s software. Qihoo 360 responded by encouraging users to discontinue use of QQ.

The Chinese will buy 16.7 million passenger cars and light commercial vehicles this year, about five million more than consumers in the U.S., according to the most recent research by J.D. Power and Associates. Driven by China’s rising middle class, breakneck development of suburbs and roads, and drastically reduced tariffs on automobile imports since 2001, a torrent of cars is choking Chinese cities in traffic and pollution. Convinced that a market existed for car rentals, Shanghai-born Ray Zhang, the founder and former chief executive officer of logistics software maker Adelph in Emeryville, Calif., returned to China in 2005 and launched eHi Car Rental a year later with $5 million in venture capital, promoting renting as a greener alternative to owning.