What: Chinese tourist spending is shifting from Japan to Korea, driving a surge in Korean department store revenues.

Why it is important: This shift highlights the impact of diplomatic relations on regional retail and the ability of Korean retailers to capture international demand.

Chinese tourists are increasingly choosing Korea over Japan as their preferred shopping destination, resulting in a notable surge in revenues for Korean department stores. This trend is largely attributed to diplomatic tensions and changing travel patterns, which have redirected Chinese consumer flows away from Japan. Korean retailers have responded swiftly, implementing targeted promotions and experiential offerings that appeal to international shoppers, particularly during peak travel periods. As a result, department stores such as Lotte and Shinsegae have reported significant sales growth, with some periods seeing foreign sales rise by as much as 40%. Meanwhile, Japanese department stores have experienced a sharp decline in tax-free sales and foot traffic, exacerbated by a Chinese tourist boycott. This evolving landscape underscores the importance of diplomatic relations in shaping retail tourism and highlights the strategic agility of Korean retailers in capturing new demand. The shift not only benefits Korea’s luxury and premium retail segments but also signals a broader transformation in Northeast Asia’s competitive retail environment.

IADS Notes: In March 2026, ChosunBiz reported a surge in Chinese tourist spending at Korean department stores, highlighting a significant shift from Japan to Korea due to diplomatic tensions. This trend was further evidenced in October 2025, when ChosunBiz documented a 40% increase in foreign sales at Lotte Department Store during the golden holidays, driven by targeted promotions for Chinese tourists. Inside Retail, in September 2025, described how Korean retailers were innovating with new experiential offerings to attract Chinese visitors ahead of visa-free entry, reflecting the competitive dynamics with Japanese retailers. Meanwhile, Sora News noted in June–September 2025 a sharp decline in tax-free sales and foreign tourist numbers at Japanese department stores, underscoring the impact of shifting Chinese tourist flows. The Financial Times, in March 2026, explored the significant losses faced by Japanese department stores due to a Chinese tourist boycott, emphasizing the influence of diplomatic relations and the need for diversification in retail strategies.

Chinese shoppers shift to Korea as department stores ride spending surge