Chinese tourists look for bargains in South Korea following MERS crisis
Despite concerns over China's economic downturn and South Korea's recent outbreak of MERS, it appears that Chinese tourists are returning to the country and looking for bargains.  After a drop in numbers visiting from China over the past few months, data from the first two weeks of September show an increase of 4.8% YoY.  Additionally, according to a report from the Korean International Trade Association, South Korea's beauty products are experiencing a booming demand, with China importing $378.3m worth of Korean-made cosmetics in the first seven months of 2015, up a huge 250.6% YoY.  

South Korea's consumer stocks lost their shine during the spread of the Middle East Respiratory Syndrome (MERS) earlier this year, but as the impact of the outbreak eases, some analysts see an opportunity to pick canny bargains.



Market watchers particularly favor the country's top cosmetic makers AmorePacific Group and LG Household & Healthcare (LG H&H), which are the favorites of big-spending Chinese tourists. Both stocks have fallen 14.3 and 6.8 percent respectively since South Korea's first MERS diagnosis on May 20.



"Concern over the recovery in Chinese inbound tourist traffic and Korean companies' local sales in China seem excessive," Nomura 's Cara Song wrote in a note released on Monday.

"There has been a strong recovery in [Chinese tourist] traffic after the outbreak and weakness [in the shares] provides a good opportunity for investors," Song said.

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Spending by mainland holidaymakers has been a key driver of South Korea's domestic consumption in recent years, with visitor arrivals from China hitting a record high of 6 million last year. However, the outbreak of MERS which claimed the lives of 36 people and infected more than 186 in South Korea earlier this year, triggered widespread panic at home and mass tour cancellations abroad.

Last month, visitor numbers fell for the third straight month to 1,069,314, down 26.5 percent from the same period in 2014, figures from the Korea Tourism Organization (KTO) showed. The number of Chinese travelers – South Korea's biggest spending visitors – plunged 32 percent on-year.



Fortunately for South Korea, the situation looks like it's on the mend. More than 300,000 Chinese holidaymakers visited South Korea in the first two weeks of September, up 4.8 percent on-year, according to a report by local media The Korea Economic Daily on Monday.



Apart from the tourism industry's faster-than-expected recovery, South Korea's beauty products are also seeing booming demand in the mainland via e-retailers or offline channels such as brand stores.

According to figures by the Korea International Trade Association, China imported $378.3 million worth of Korean-made cosmetics in the first seven months of 2015, up a whopping 250.6 percent from a year earlier, making South Korea the second-biggest cosmetic exporter to China behind France.