South Korea’s Medical Tour and Cosmetic Industries Suffer Due to THAAD Situation

Mar 14, 2017

South Korea’s medical tour and cosmetic industries are suffering from ‘THAAD (Terminal High Altitude Area Defense)’. Number of Chinese patients who visit South Korea is reduced by half. Cosmetics that are waiting to be exported are not being shipped and are just waiting to be shipped.
According to hospitals and related businesses on the 13th, number of Chinese patients who have been visiting South Korea’s plastic surgery and dermatology hospitals in 2017 has been reduced by half compared to last year. Cosmetic companies that entered Chinese markets are at a point of stopping production of their products. South Korean Government has also tentatively stopped an event, which is expected to take place this year, to attract Chinese medical tourists and is thinking about solutions regarding this situation.
In 2015, number of foreign patients who had visited South Korea and total amount of profit from treatments were 297,000 and $584 million (669.4 billion KRW) respectively. About 100,000 patients were from China and amount of money Chinese patients spent on treatments was $189 million (217.1 billion KRW) which was about a third of entire profit. As more and more Chinese patients starts not to visit South Korea anymore, plastic surgery and dermatology industries have received direct impact. 24% of Chinese patients visit South Korea in order to receive plastic surgery treatments.
“Number of Chinese patients is reduced by 30 to 40% compared to last year.” said a representative for a plastic surgical clinic that is in Gangnam. “Amount of loss is enormous as more than half of patients who visit most of plastic surgical clinics in Gangnam are from China.”
Although reduction of number of Chinese patients is an immediate concern, plastic surgical clinics that have been planning to enter Chinese markets by riding ‘K-Beauty’ trend are also facing dark days. Although marketing and advertisements situations in China are problems, it is unknown if they can receive approvals from Chinese Government.
“Although we were planning to establish plastic surgical hospitals in South-East Asia including China this year, we stopped this project for now.” said a representative for a large plastic surgical hospital. “Businesses in China are not easy as amount of hostility from Chinese Government towards South Korea has grown and Chinese are agreeing with Chinese Government.”

Chinese tourists are purchasing cosmetics from a duty free in South Korea.  (Reference: Database from The Electronic Times) <Chinese tourists are purchasing cosmetics from a duty free in South Korea. (Reference: Database from The Electronic Times)>

Cosmetic industries are also facing difficulties. In 2016, amount of exports from South Korean cosmetic industries was $2.53 billion (2.90 trillion KRW) which was 40% increase from 2015. LG Household & Health Care Ltd. and Amore Pacific made their biggest sales in China.
Retaliation from Chinese Government towards South Korean cosmetic companies has become conspicuous recently. LG Household & Health Care Ltd.’s factories in Hangzhou received fire inspection from Chinese Government and it is heard that they received correction orders and stoppage of operations for a month. Amore Pacific received a notification from Chinese authorities regarding disqualification of 3 types of its products such as moisturizing lotion and water mist as imported products. This indicates that non-tariff barriers such as total inspection and tightening of certifications have risen. It is predicted that bio companies that are targeting cos-medical (cosmetic + medical product) markets as a new source of profit are also going to be affected by this current situation.
“Although we made supply contracts with a large Chinese distributor, we received a notification that it wants to put off businesses with us as placement of THAAD has started.” said Chairman Jung Jae-joon of AriBio. “Even if we resume businesses, it has requested that we should hide the fact that our products come from South Korea by removing Korean marks and other methods.”
Ministry of Health & Welfare (MOHW) is also working on preparing solutions as areas that have led growth of health industries such as medical tour and cosmetics have suffered. It has halted medical tour projects such as ’China Wang Hong Invitation Medical Experience Event’ that are supposed to take place during first half of this year in order to target Chinese markets. During sometime next week, it is going to hold a meeting by gathering representatives from major hospitals such as plastic surgical hospitals and dermatology hospitals.
This indicates that paradigms for South Korea’s medical tours need to be changed. ‘Factory-type’ treatments that take place by attracting medical subjects and large number of people, which are focused on plastic surgery and dermatology, are the problem. Establishment of strategies to attract individual medical tourist and expansion of areas of attraction to severe illnesses are needed.
“We are going to prepare strategies to attract patients who are suffering from severe illnesses in China by next year and work with Chinese companies to attract individual medical tourist.” said Deputy Director Kim Han-eol of MOHW Foreign Medical Business Department.
Staff Reporter Jung, Yongcheol |

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