South Korean products, from cars to pop stars, have a huge market in neighboring country China. But China is increasingly using its consumer buying power as a foreign policy weapon.
A series of boycotts by Chinese consumers gained momentum this week as a kind of protest against South Korea's adoption of a US-built missile defense system.
While South Korea is not the first country targeted by Chinese consumers (Japanese and US companies have also been boycotted), the latest effort suggests a growing willingness by the Chinese government to use consumer purchasing power as a means of sanctioning other countries.
On Friday, Beijing denied any knowledge of such sanctions and continued to condemn Seoul’s decision to deploy the US-built Terminal High-Altitude Area Defense program (THAAD). China says THAAD threatens its security, as the radar reaches into Chinese territory, thus theoretically enabling Washington and Seoul to monitor Chinese flights and missile launches.
"There are absolutely no anti-THAAD campaigns in China, still less violent campaigns,” said Chinese foreign ministry spokesman Geng Shuang on Friday, reported the Associated Press. “Instead of chasing shadows that don't exist, we hope the South Korean side will heed the voice of the people and take concrete actions to avoid causing further damage to bilateral relations.”
But several government-controlled Chinese media have called for coordinated voluntary boycotts against South Korea’s imports, especially the retail chain Lotte for its involvement in THAAD, The Christian Science Monitor reported on Wednesday. The Seoul-headquartered Lotte Group operates 99 large discount chain stores, 13 small supermarkets, and five department stores in China.
“The land swap the board of the unlisted Lotte Group approved on Monday trades part of a golf course with land from the government. The golf course, owned by Lotte, is in the Seongju region, southeast of Seoul, and is also the military’s preferred site for the THAAD system. In exchange for the land, the government agreed to give Lotte military property.”
The objection quickly escalated this week, as several Chinese retailers pulled Lotte products from their shelves while protests broke out outside Lotte stores in China. On Thursday, a Lotte affiliate, Lotte Duty Free, said its website had also been the target of a suspected Chinese cyberattack.
The diplomatic tensions have also spread to tourism. South Korea has been a popular destination for Chinese tourists in recent years. Approximately eight million Chinese citizens visited South Korea last year, accounting for nearly half of the country’s total visitors.
South Korea’s state-run tourist agency said on Friday that Beijing has urged its travel agencies to stop selling group trips to South Korea. At least one travel company, Tuniu, has already complied, citing its objection to the deployment of THAAD in a statement on Friday, according to CNN.
Korean cultural exports popular with Chinese audiences are also being swept up in this political dispute, as China blocked videos of South Korean music and TV dramas on several streaming services this past weekend, Billboard reported on Tuesday.
This is not the first time that Chinese consumers have expressed their anger and disapproval on international issues. In 2012, amid an ongoing territorial dispute over the Senkaku Islands, also known as the Diaoyu Islands, Chinese consumers targeted Japanese cars. To protest the UN ruling in favor of the Philippines in a territorial dispute in the South China Sea last July, products associated with the United States, including the fast-food franchise KFC and iPhones, were the subject of boycotts, as the Monitor noted.
Some see the latest boycotts as a sign that China, the world's second largest economy, may use this tool more freely in the future.
“What's happening to Korean companies now is a pretty good playbook for what might happen to US firms over the next year," Andrew Gilholm, director of analysis for China and North Asia at Control Risks told Reuters. “Rather than the big dramatic trade war ... it's probably more likely to be manifested as regulatory harassment of companies – one of the lower intensity tools for China.”
This report includes material from the Associated Press and Reuters.