The Companies With the Most to Gain as China and Korea Make Up

by Dramelin 3:00 AM 0 comments

When Chinese President Xi Jinping sits down with South Korea’s Moon Jae-in in the days ahead, business leaders will be breathing a sigh of relief.
The warming of relations between two of Asia’s biggest economies is a welcome sign for many companies caught in the middle of a year-long political standstill.
Seoul’s decision to deploy a U.
missile shield prompted an economic backlash from Beijing that struck South Korean businesses from airlines to cosmetics companies -- even the nation’s K-pop stars felt the sting.
Some sectors of the economy have been seeing improvements even before the detente, while progress may take more time for others.
Here are companies with the most to gain from cooling tensions: Fly Me to the Moon? Beijing earlier this year suspended package tours to Korea, cutting off the stream of Chinese tourists eager for duty-free shopping.
 The country is also a destination for tourists seeking medical procedures like nose jobs and eyelids surgery.
Travel is slowly being restored.
Spring Airlines Co.
, China’s biggest budget carrier, last week resumed some flights to South Korea.
Asiana Airlines Inc.
announced Tuesday it will release discounted tickets that include China-to-Korea flights “as a catalyst to kick off the thawing mood.
” But the return of tourists is at a trickle.
A representative from the Beijing Youth Travel Service Co.
said it hasn’t reintroduced packages to South Korea because of a lack of demand.
The resort destination of Jeju is still waiting for the influx.
 Kim Nam-jin, deputy director of tourism for the island, says more than 3 million Chinese tourists came to Jeju last year, but the number plunged by 70 percent due to the missile conflict.
While South Korean tour agencies and Chinese travel firms have resumed discussions to arrange trips, he said tangible improvements aren’t expected until at least February.
Make-Up Time Sales of South Korean-made consumer goods in China suffered as tensions flared, denting retailers’ sales and profits.
Perhaps nowhere was that more pronounced than with beauty products.
 Shoppers from China contributed to more than 50 percent of duty-free revenue in 2016 generated by Korean retailers of cosmetics and accessories, according to Bloomberg Intelligence.
Operating margins for companies such as Amorepacific Corp.
could rebound more than analysts expect next year because of the thaw, according to BI’s Catherine Lim.
The cosmetic maker’s stock rallied 21 percent last month after touching a 2 1/2 year low in September amid speculation of warmer ties with China.
Amorepacific has also found success by expanding to places outside of China, such as Southeast Asia.
A Lotte Frustration Lotte Group, which provided the land for the Thaad missile shield, has been one of the hardest hit by the dispute.
The conglomerate had to suspend operations in most of its 99 hypermarkets in China for alleged violations of fire-safety rules, and halted a 3 trillion won ($2.
7 billion) theme-park project in northeastern China.
Lotte is in discussions with Chinese officials to resume work on the theme-park and shopping-center project in Shenyang, and an agreement may come before the end of the year, a Lotte executive said.
The group recently received approval to start the second phase of construction for a 1 trillion won commercial complex in Chengdu.
Yet the outlook for its markets is less optimistic.
Lotte hasn’t resumed any stores that had stopped operations in China, according to a Lotte Shopping Co.
Lotte, which hired Goldman Sachs Group Inc.
to advise on the sale of the China business, said the disposal plan is still on.
Jump-Starting Autos Hyundai Motor Co.
and Kia Motors Corp.
saw sales plunge as their brands fell out of favor with mainland customers after South Korea’s decision to deploy the U.
Hyundai’s car sales in China dropped 64 percent in the second quarter.
 Disputes with local vendors over non-payment of dues also prompted Hyundai’s Chinese venture to stop production on and off.
Now Hyundai is seeing signs of improvement, with sales in China reaching the highest level of the year in September.
Hyundai said it will continue its efforts to serve its largest market, opening its first brand studio in China last week, and planning to expand its SUV lineup in the country from four to seven by 2020.
Hopping on Pop Chinese mainlanders may find better access to BigBang tunes and “Descendants of the Sun” episodes, after the political dispute deflated Korea’s music and entertainment industry.
The so-called Korean Wave of popular culture that spans drama, pop music, fashion and cosmetics is an increasingly important part of the South Korean economy.
The nation’s entertainment shares slumped amid speculation China was regulating South Korean content, limiting access to artists and programs.
China’s major internet-streaming companies reportedly pulled popular Korean soap operas and historical dramas from their services.
CJ E&M Corp.
, the maker of K-pop and K-dramas, said that while it hasn’t seen any immediate changes, it expects the detente will bring “a positive impact for future cultural exchanges.
” — With assistance by Sterling Wong.