China has overtaken Japan in visitor numbers to South Korea for the first time on record in the first half of this year, ending a long-held Japanese dominance of the market, according to Nomura.
Chinese travelers accounted for more than a third of total tourists in South Korea in the first six months of the year, outpacing Japanese visitors, which made up about one quarter of the total in the same period, Nomura said in a report this week.
Young Sun Kwon, economist at Nomura, said that although China`s economic growth slowed in the first half of the year, the number of visitors to South Korea still managed to surpass the number of Japanese visitors, which declined in the duration.
"Chinese visitors increased by 46 percent year on year in the first half of 2013, up from 30 percent in the first half of 2012, while the number of Japanese visitors declined by 26 percent year on year this year, from a 30 percent increase last year," Kwon said.
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The growing number of Chinese visitors to South Korea is being supported by an increasing number of middle class families in China and a gradual appreciation of the yuan, Kwon said.
"Barring a hard landing scenario, the increasing number of middle income households in China should support Korea`s tourism business and current account balance," he added.
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China`s gross domestic product (GDP) per capita rose almost 12 percent to USD 6,090 in 2012 from the previous year and is expected to reach USD 7,000 either this year or in 2014, according to Nomura.
Growth on that measure comes even as expansion in the world`s second largest economy slowed to 7.5 percent in the second quarter from the previous year, compared to 7.7 percent in the first quarter, marking a slowdown in nine of the last 10 quarters. Why South Korea?
Kwon said there are a number of factors drawing Chinese tourists to South Korea, including a concerted effort by the government to attract visitors.
"Korea is close to China with one to three-hour flights. Korean culture and food are getting more attraction from the Chinese through media and the internet. The Korean government is also making lots of efforts to induce Chinese tourists. For example, there is visa waiver for visiting Jeju Island in Korea," Kwon said.
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Meanwhile, the major reason in the decline in the number of Japanese tourists is the stronger Korean won against the Japanese yen, Kwon said.
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The yen has weakened nearly 7 percent against the won so far this year on Japan`s aggressive economic policies to revive its economy, making it more expensive for the Japanese to travel to South Korea.
-By CNBC.com`s Rajeshni Naidu-Ghelani; Follow her on Twitter @RajeshniNaidu
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