Travel agencies and merchants in South Korea have been paying kickbacks to their Chinese partners in exchange for introducing more Chinese customers to them. Although Chinese tourists can get low-priced trips to South Korea, the situation makes for a poor experience as tour guides push clients to go shopping to maximize their own income. Experts say the practice is not unusual due to the short-term benefits it brings to the parties involved. But they also warn that the South Korean government needs to strengthen supervision over the industry because such practices will hurt the tourism industries in both countries and ultimately damage South Korea's image.

Chinese tourists swarm the cosmetics department at a Lotte duty-free store in Sogong-dong, South Korea on September 30, 2015. Chinese tourists spent about $22 billion in South Korea in 2015, accounting for about 1.6 percent of the country's GDP in 2015, the Shanghai-based National Business Daily reported on January 3. Photo: CFP

South Korea has been one of the hottest destinations for Chinese tourists in recent years. But some South Korean travel agencies and local merchants have undertaken shady business practices to attract tourists from China, South Korea's largest source of foreign tourists.

Experts said these practices could end up damaging the tourism industries in both countries.

In early March, for instance, a South Korean travel agency received a 20-person tourist group from its Chinese partner, a travel agency in Harbin, capital of Northeast China's Heilongjiang Province, according to a report on people.com.cn on Wednesday, which cited the Joong Ang Daily, a prestigious South Korean newspaper.

The travel agency charged the tourists only 900 yuan ($138.96) for their five-day trip to Seoul and Jeju Island. This price was low, far lower than even the round-trip air fare between Harbin and Seoul, according to the report.

The lowest price for one-way flight from Harbin to Seoul on April 6 (Wednesday) costs around 1,300 yuan, according to ctrip.com, China's largest online travel service provider.

People.com.cn reported that the South Korean travel agency paid 300 yuan per tourist to its Chinese partner for each one the latter introduced, but following typical practices, the South Korean travel agency must collect the payment from their Chinese partners for the tourists' accommodations, food and transportation costs in South Korea. The kickback paid by the South Korean travel agency allows the Chinese travel agency to be able to offer its customers a big discount.

"This kind of phenomenon has existed for some time, and it is not surprising for industry insiders," said Xing Yongfeng, head of Quyou Travel Agency in Shanghai.

"This phenomenon really exists in the industry, though it is not so extensive," a travel specialist with Ctrip, who wished to remain anonymous, said in an e-mail sent to the Global Times on Saturday.

Multiple causes

For Chinese travel agencies, they can easily reap profits by introducing tourists to South Korean travel agencies that are willing to pay referral fees. Some South Korean travel agencies pay as much as 700 yuan for each tourist that a Chinese partner introduces, according to the people.com.cn report. 

"This practice can't be totally prevented because there is still market demand," Xing told the Global Times on Friday.

"Some Chinese tourists, especially elderly tourists, hold a lucky psychology and hope to enjoy a high-quality tourist experience while spending as little of their own money as possible," Xing noted.

The market demand from both Chinese agencies and Chinese tourists give the Korean travel agencies opportunities to scramble for customers using kickbacks.

"The fierce and irrational competition in South Korea's tourism industry has led to cut-throat competition," the Crip travel specialist said.

Xing noted that South Korea has to compete with Japan for Chinese tourists. 

"Just based on the number of flights we book in recent days, Japan is a more popular destination than South Korea for Chinese tourists," Zhang Wu'an, spokesperson of Shanghai-based Spring Airlines Co, told the Global Times on Friday.

About 5.98 million Chinese tourists visited South Korea in 2015, down 2.3 percent year-on-year due to the outbreak of the Middle East Respiratory Syndrome, while 4.99 million Chinese tourists visited Japan in the past year, an all-time high thanks to a weaker Japanese yen, cankaoxiaoxi.com reported on February 17.

The seemingly cheap cost of some trips also brings some unpleasant travel experiences to Chinese tourists.  

"The South Korean travel agencies will earn their money back in the end and Chinese tourists will ultimately pay the price," Zhu Linlin, media manager of the Korea Tourism Organization in Beijing, told the Global Times on Friday.

The South Korean travel agencies only break even when each Chinese tourist spends at least 1.5 million South Korean won ($1,350) at the travel agencies' contracted shops, according to the people.com.cn report, which cited a South Korean industry insider. This is why South Korean travel agencies require their tour guides to take Chinese tourists out shopping at so many places.

The 20-person tour group from Harbin was taken to shopping malls six times during their two-day trip to Seoul.

According to a tour schedule for a five-day trip to Seoul that the Global Times received on Friday from a small Chinese travel agency in Harbin, Chinese tourists have to visit six stores and have to stay at each store for more than 50 minutes.

This travel agency charges 1,860 yuan for each Chinese tourist. 

"You yourself can decide whether or not to buy anything, but you must enter the stores," Li Nan, a staff with the Harbin travel agency, told the Global Times on Friday.

However, there can be consequences for tourists who don't open their wallets.

"The local tour guides will be unhappy if you don't buy anything, and poor service will follow," said Xing from the Quyou agency.

Supervision needed

Cut-throat competition can lead to disorder in the tourism industries in both South Korea and China, Zhu noted.

The biggest victim of the practice is South Korea's national image.

"This will give foreign tourists a false impression of South Korea and hurt its attractiveness as a destination," the Ctrip travel specialist said.

"Fewer tourists will lead to less tourist income," Xing said. "For many travel agencies like ours, we also appeal for benign competition. Below-cost price competition makes us unprofitable. Numerous complaints may also arise due to poor travel experiences."

South Korean authorities have recently taken steps to regulate the country's tourism market.

South Korea's Ministry of Culture, Sports and Tourism announced on March 27 it had revoked the licenses of 68 domestic tour operators. The authority said the companies lured Chinese tourists to buy cheap tour packages and hired unqualified guides.

Zhu noted that this move showed the South Korean government's determination to curb the unhealthy competition in the industry.

But some people worry that the South Korean government will not do enough because fewer tourists from China means less tourism income for South Korea.

About 45.2 percent of the foreign tourists who visited South Korea in 2015 come from China, according to media reports.

But Xing said the government has to strengthen supervision over the industry "or it will do greater damage to the country's image," he said.