Tourist, Export Surges Herald Korean Recovery

After having laid off seven of his eight workers last year, tour operator Richard Park now displays a help-wanted sign in his Koreatown storefront window.

“It’s going to be good this summer,” said the broadly smiling owner of Paradise Tour, where bookings from South Korean tour groups are pouring in.

Just as the collapse of South Korea’s economy last year hit parts of Southern California hard, so South Korea’s fledgling recovery is already trickling across the Pacific.

Not only are large numbers of tourists from South Korea beginning to return to the Los Angeles area, but California exports are also increasing to meet rising Korean consumer demand--up about 40% in the first quarter alone.

Mike Koh, vice president at Recycle Fibers International, a major exporter in Commerce, shares Park’s enthusiasm about Korean customers. An important sign: His buyers in South Korea are paying their bills on time.

“Before, they kept dragging out their payments 60 or 90 days,” Koh said. “Absolutely, I think the Korean market will grow.”

“Everybody in Koreatown is feeling better,” said Heung Kim, a manager at Seoul Palace Hotel in Koreatown, the commercial hub of the nation’s largest concentration of Korean Americans, estimated at 300,000 in the Southland. Kim said his hotel’s occupancy is already running at 80%, compared with 55% a year ago.

Certainly there is caution among many in Koreatown. Given the dramatic decline in South Korean tourism and exports in the last year, no one expects Korean consumers or visitors to empty their wallets as they did in the past. Over the last 18 months, hundreds of businesses in the region with links to South Korea have closed up or cut back.

Still, the reappearance of Korean visitors loading into tour buses, standing in buffet lines and shopping--even window-shopping--has done wonders for morale in Koreatown, which was hit very hard during the Los Angeles riots in 1992 and perhaps even harder when South Korea’s economy and currency collapsed in late 1997.

Korean tourists had been one of the region’s top overseas visitors. Nearly 200,000 Korean visitors arrived in Los Angeles County in 1997, according to the Los Angeles Convention & Visitors Bureau. But that shrank to just 81,000 last year, and merchants in Koreatown don’t think even that many came.

The decline in California’s exports to South Korea last year was nearly as dramatic. Shipments of goods to South Korea plunged by 38% in 1998, to just over $7 billion. That was a far bigger drop than with any other major trading partner.

But more recent trade statistics and interviews with exporters suggest a turnaround is underway.

The number of containers leaving the ports of Long Beach and Los Angeles for South Korea rose 8% in March, the latest data available. Some of the biggest gains early this year: meat products, electrical machinery and chemicals.

“We’re getting some breakthrough,” said Gordon Palmer, planning manager at the Port of Long Beach, the country’s busiest.

That’s evident at companies such as Callaway Golf, the Carlsbad maker of golf clubs. Spokesman Larry Dorman said orders to South Korea have been picking up since March. Although the overall volume to South Korea remains well below pre-crisis levels, he said, the picture is brightening.

Sung Won Sohn, Wells Fargo Bank’s chief economist in Minneapolis and a close observer of the economic scene in his native land, is optimistic about California’s near-term trade prospects with South Korea.

“Koreans are importing not only the machinery necessary for exports, like semiconductor equipment, but also more consumer luxury goods,” Sohn said.

One big reason is the resurgence of consumer spending in South Korea lately, reflecting pent-up demand after more than a year of hoarding and saving. Many Koreans had refrained from spending, not only because of economic problems, but also because of social pressures, as those consuming heartily or traveling abroad were severely criticized as being unpatriotic or extravagant.

But with those pressures having subsided, Sohn and travel experts say, the number of Koreans heading abroad this summer will probably exceed even those of the heady summer months before the economic fall.

Whether that happens or not, new tourism-related businesses in Koreatown are sprouting again. Real estate brokers say retail space in the Koreatown area is becoming increasingly tight. Travel agents say bookings are increasing, and Asiana Airlines is planning to add a second daily flight between Los Angeles and Seoul this month.

Even so, the outlook is guarded. The recent burst of new retail stores will intensify competition, analysts say, and it’s not clear that Korean visitors will support that.

Shin Hyun Chun, a homemaker from Seoul, arrived a week ago to visit relatives in Los Angeles. But Shin still feels skittish about splurging. While the South Korean currency, the won, has strengthened as of late, it remains significantly below its pre-crisis value, leaving her with far less buying power than two years ago. Moreover, Shin has doubts about whether the economic revival is genuine.

Cathy Ghil, who with her husband, Gilbert, owns and operates Dae Ruk, a department store on Wilshire Boulevard, said people such as Shin typify the Korean visitors nowadays.

Still, Ghil is happy to see Korean visitors again. At its worst, she said, “they did not spend one penny here.” Her business survived only by cutting staff, depleting inventory and shifting focus from tourists to Korean Americans.

“I thank God we survived with local customers,” she said.

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BOUNCING BACK: Nearly bankrupt last year, South Korea is showing signs of strength. A1