Skift Take

Current conflicts in Northeast Asia do not stop people from traveling to and from the region, but they do redirect tourism flows, benefiting some destinations and hurting others.

Northeast Asia is looking like a hellhole where, everywhere you turn, there’s an Asian tiger snarling at another.

South Korea is locking horns with Japan in a months-long quarrel that began when Japan started restricting exports of vital manufacturing materials to South Korea.

China is isolating Taiwan and its independence-leaning president Tsai Ing-wen by banning individual tourists from 47 Chinese cities to travel to Taiwan.

Hong Kong is facing its worst crisis since the British handover in 1997.

The current troubles in Northeast Asia show how travel is a geopolitical weapon, or a victim of geopolitics. Hong Kong tourism is suffering from 10th weekend of protests. Taiwan tourism will bleed as a result of the China’s travel cut. Japan may end up with fewer Koreans with a #BoycottJapan trending in South Korea.

“Geopolitics has always been at the forefront of North Asia, particularly relating to China’s stance on a number of fronts including Taiwan, Hong Kong, North Korea, Xinjiang, and the South China Sea,” said Mark Carrick, the Greater China director at Pinkerton, a global provider of corporate risk management solutions. “When combined with the trade issues, and Huawei sensitivities, you have a very unpredictable geopolitical environment.”

“All the above issues straddle North Asia and have the potential to disrupt organizations with an operational footprint in the region,” he added. “Foreign multinational corporations with operations and expatriate executives in the region will be feeling the tensions, and the fast-changing regulatory framework that has the potential to cause significant instability and disruptions to their operations.

“Hong Kong and Taiwan are two issues currently reverberating around the business world, and both need constant monitoring. Across all North Asia is a dynamic and complex operating environment that requires businesses to be abreast in their understanding of all the geopolitical factors at play.”

Travel & Tourism Lens

From a travel and tourism lens, leisure travel is adversely affected first than business travel whenever travelers feel, rightly or wrongly, that traveling to a location may be uncomfortable or dangerous.

“Leisure travelers are typically less loyal to their destination and can easily and quickly choose a different place to go to,” said Yuval Tal, a partner at international corporate law firm Proskauer.

“If one booked a beach trip and there are events that make one concerned about the destination — perception is everything here — it’s easy to switch to another beach destination, even if one doesn’t see a great risk in going to original place. Why take the risk? This is less the case for business travelers as often, seeking an alternative is costly or not practical so the risks/issues have to be much more tangible before the trip is delayed or changed,” he said.

“On the other hand, events that affect currency exchange rates could have a significant effect on leisure travelers: the U.K. is much cheaper today than it was a week ago and that may cause tourists, including those from Asia, to prefer it to other places. Business travelers would not typically be affected by a change in exchange rates unless it is something that is viewed as part of a longterm trend.”

Tal does not see any of the current geopolitical issues as affecting the whole region. “They will or may affect the countries involved, but not the region as a whole,” he said.

Losers of Hostilities

As geopolitics can interrupt or reshape tourism flows, who are the winners and losers in the current North Asia conflicts?

Pundits interviewed by Skift put Southeast Asia, Australia/New Zealand, and Japan as key winners, as well as China’s domestic destinations, since Chinese tourists are flowing towards those directions.

Biggest losers are Taiwan, Hong Kong and the U.S.

“The most obvious loser given the current state of play is Taiwan,” said Nick Wyatt, head of research and analysis of travel & tourism at GlobalData. “It is losing a large chunk of its biggest source market and this is practically impossible to replace, especially given the sudden nature of the ban. Hong Kong would have been a candidate to benefit from that but its protest problems mean that mainland Chinese domestic tourism could be a winner.”

Last year, China was Taiwan’s number one source with 4.7 million visitors, according to GlobalData figures. The ban does not apply to group travel, so anyone who really wants to visit will have to explore that avenue.

“The relationship between China and Taiwan is increasingly strained and with little signs of improvement, this is definitely a situation to keep an eye on in case further bans are imposed,” said Wyatt.

Pinkerton’s Carrick also sees the ban as having a “significant” impact on Taiwan’s economy, as this tourist flow is a high revenue generator.

“We assess a large portion of that tourist revenue will remain on the mainland, as is the intent of the policy,” he said.

Hong Kong is another obvious loser, with Chinese travelers going elsewhere, travel advisories from the U.S. and Australia among others against it, and massive flight cancellations affecting both leisure and business travel to the city.

The longterm may be even more significant for Hong Kong, should businesses decide to establish or relocate their Asian headquarters/operations to other places, pointed out Proskauer’s Tal.

The U.S., seen as another loser with a “noticeable” fall in numbers of Chinese tourists, needs to assess the wider loss from numerous niche industries. Said Tal: “Take for example the whole industry surrounding Chinese children coming to study at U.S. colleges. Reports show that that industry has started to show significant drops in numbers. That affects housing, travel and even retail.”

ASEAN A Winner

As for winners, Tal observed that the immediate beneficiaries of China outbound flows are ASEAN countries such as Singapore and Asian countries such as Japan and, for long-haul trips, Europe and Australia/New Zealand.

“One would expect that trend to continue,” said Tal. “On the business travel side, we are seeing an increase in Chinese outbound business and related travel to Europe and other Asian countries.”

Meanwhile, foreigners in the mainland can count themselves a beneficiary of China’s ban on Taiwan. One such is Marco Förster, an associate at Dezan Shira & Associates, a pan-Asia firm providing legal, tax and operational advisory to international corporations.

“Beijing is one of the 47 mainland Chinese cities which have banned individual travel to Taiwan. I can now travel to Taiwan for much cheaper flight prices. Hotel prices, et cetera, are also likely to decrease,” he said.

Another winner, in Förster’s eyes, are big travel agencies catering to mainland tourists, including Ctrip and Alibaba’s Fliggy.

“They can just shift their sales towards another country. They won’t be affected as much as the ones focusing on one country only and are thus highly dependent on diplomatic relations between the countries,” he said.


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Tags: china, hong kong, japan, south korea, taiwan, travel bans

Photo credit: A woman practicing tai-chi in Hong Kong. Northeast Asia can do with some inner calm. Andy Turner, Flickr

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