Wander the streets of Seoul's Myeongdong district, South Korea's trendiest shopping area, and one could easily be forgiven for thinking the global recession has bypassed this part of the world.
At the Lotte department store, South Korea's Bergdorf Goodman, it's hard to miss groups of Japanese tourists huddled around counters from cosmetics to housewares. On the main floor, at the Gucci boutique, there's a 10-min. wait just to get a foot in the door. At Louis Vuitton, in the building's annex, there's also a line. There's a simple explanation: "It's really cheap and easy to come here," says 24-year-old Shota Li from Tokyo, who was shopping at Lotte with friends. (See 10 things to do in Seoul.)
South Korea's economy may be stumbling, but because of major fluctuations in currency-exchange rates during the global financial crisis, Seoul has become a bargain basement for East Asians, particularly wealthy Japanese. Since the beginning of last year, the won, South Korea's currency, has fallen about 65% against the Japanese yen. The change has made prices so attractive that Japanese are jumping on airplanes for the 2½-hr. flight from Tokyo in droves, even though Japan's economy, too, is in tatters.
In February alone, nearly 300,000 Japanese tourists visited Korea, which amounted to half of all foreign visitors and was a remarkable 71% increase over February 2008. (January and December saw tourism increases of more than 50%.) The ranks of visitors from China have also swelled, increasing by some 15% in January. Many join tour groups and pay as little as $300 for two nights' accommodation and a return flight. (Read about luxury shopping in Seoul.)
At a time when Korean consumers are becoming more cautious in their spending the country's economy is forecast to contract 2% this year the mini tourism boom is giving a much-needed boost to retailers and other companies catering to foreigners. The government is doing its bit to provide support. The Korean National Tourism Organization recently rolled out a special ad campaign targeted at Japanese. Its slogan: "Pay only half and have double the fun."
Foreigners aren't flocking to Seoul just for pricey European bags and clothing. Their itineraries often include "sports massages," body tattooing of eyebrows and eyeliner, and other services. "It's fantastic," says Mrs. Kamada, who was visiting Seoul with her family from Shiga, Japan. "We can do so much because the yen is so strong. My husband is here to have a massage, and I'm having a body scrub with my daughter."
Locally made cosmetics are a big hit with tourists, especially Japanese who believe Korean women are second to none when it comes to flawless skin. "Everyone agrees that Koreans take really good care of their skin," says Rieko Dubreau, a Japanese housewife who lives in Seoul. "Last year the Japanese didn't want to come to Korea, but now it's the time to buy."
Outside a Missha store, a popular Korean cosmetics brand, Kayoko Kusayama says she flew to Seoul specifically to load up on personal items. In Tokyo, she says, Korean cosmetics like Missha are almost double the price. She's particularly interested in products endorsed by a Japanese transgender TV personality and makeup expert called IKKO who also just happens to be a spokesperson for the Korea National Tourism Organization.
Still, Seoul retailers worry that the buying spree will prove fleeting. The won has strengthened by about 10% against the yen and the U.S. dollar in the past month, making Seoul prices a shade less enticing. As the recession deepens throughout Asia, consumer spending could decline further and tourism could evaporate. Says Lee Yun Jung, a manager of Banilla Co., a Myeongdong cosmetics shop that has hosted about 600 customers a day, 80% of them Japanese: "We know these are good times." And bad times could be a couple of currency-market moves away.