Jeju Island, located off the southern shore of South Korea, is a Special Self-governing Province of the Republic of Korea. Its unique combination of mild climate, unusual geologic features, and natural scenic beauty (Figures 1-5) gained its recognition as UNESCO World Natural Heritage, and makes it a popular tourist destination not only for mainland Koreans, but for the Greater East and Southeast Asia populations and beyond. Over 268 million people live in major urban centers within a two-hour plane ride from Jeju International Airport that includes all of mainland Korea’s, most of Japan’s, Taiwan’s, and China’s largest cities (see Figure 6). In the last two decades, the central and Jeju’s provincial government have worked to develop the island as an international tourist hub. This essay explores the outcomes.
Jeju’s population density is substantially lower than the mainland’s; living cost is also slightly lower. Island residents enjoy a leisurely lifestyle with seaside resorts all along the coastline. Its white sand beaches, geomorphic features/attractions, parks, mountain and ocean scenery, and a large number of flights daily from all major Korean and East Asian international airports contribute to Jeju’s attractiveness for real estate investment and tourism that includes sightseeing, medical tourism, and gaming casinos.
In 1998, then President Kim Dae-jung announced plans to develop and promote parts of Jeju Island as a “Free International City” modeled after Hong Kong and Singapore. In order to promote foreign investment and place Jeju on the world map as a tourist hub, Jeju Province was granted “Special Self-governing” status in 2006.
In 2010, the Jeju Provincial government passed an immigration provision system that offers residency to a foreign investor (and family) who invests USD 500,000 (564,220,000 Korean won; 1 USD = 1,128.44 Korean won approximately) in Jeju. The idea was to attract foreign investment to Jeju that would boost its economy to become a dynamic hub for international activities and corporate investment. The provision enables an investor to obtain an F-2 visa which allows the investor and immediate family to stay for two years initially. After the two-year period, visa extensions can be granted, upon application, to stay till the fifth year. At the end of the fifth year, a successful application for F-5 visa qualifies the investor to become a permanent resident of Korea. With this immigration system in effect, investors have included Europeans and North Americans of Korean descent, but the single most prominent group has come from the Chinese mainland, and so this study focuses on them.
Chinese ownership of Jeju real estate increased by 483.7% between December 2011 and 2014 (Lim, 2017). By the end of 2015, 73% of foreign-owned buildings have Chinese ownership (Lim, 2017). Jeju has numbers of advantages for them. A three-bedroom condominium costs more than USD 1 million in Beijing and Shanghai, while the same size condo in Jeju costs half that at USD 500,000. Winters on Jeju Island are much milder than the bitter cold of Beijing, and the air is far cleaner than the notorious air pollution in the Chinese capital. Chinese citizens have always been wary of the status of property ownership rights at home. Thus, many Chinese would consider owning a second home here. The possibility of residency just adds icing to the cake.
Chinese real estate developers recognized Jeju’s special provisions as a great opportunity for high-end residential development, and Jeju became one of several targets worldwide for investment. Early on, many Jeju’s local population welcomed foreign interest and capital. But the actual impacts have been more complicated, with a number of unanticipated adverse effects. Chinese real estate investors come with money. They wish to own property without state control, but not necessarily become Korean citizens. They seek leisure and a slice of the good life; the permanent residency seems mainly a bonus.
The question is how Jeju was affected by all this investment. While the initial intent of the Jeju provincial government was to improve quality of life for Jeju residents through tourism and real estate development, benefits have not yet materialized. Instead, the changes resulting from the development have had unintended consequences that have aroused discontent, resentment, and opposition from local Jeju residents. This article looks at three Chinese investment projects undertaken in collaboration with the Jeju provincial government to examine some of the dilemmas associated with them. The three projects are: Baozen-ro, Raon Private Town and Resort, and Jeju Healthcare Town.
The Jeju street, currently renamed Baozen-ro, was previously known as Jeju’s Rodeo Drive where locals shop. In 2011, Baozen, a very large Chinese cosmetics company, rewarded its employees with a vacation trip to Jeju City, located on the north shore of Jeju Island. Between September 13 and 26, 2011, 12,000 Baozen employees vacationed there. Their appreciation of the island added to its positive reputation in China and gradually increased tourist visitation from all over China. It is unclear whether the Baozen Cosmetics Company actually invested in real estate or not, but it was instrumental in making Jeju tourism a trend. Its impact can be seen on the landscape.
A non-vehicle street-mall of about 4 blocks in length was promoted as a favorite destination for Chinese visitors, and this mall was re-named Baozen-ro (ro is Korean for road) in honor of the company. Shops began to feature Chinese products, cosmetics, ginseng, and specialty Korean pharmaceutical products that the Chinese use, plus others that cater to the Chinese, including banks, tea wholesale and retail stores, Chinese karaoke, driving schools with Chinese instructors, import/export firms, Chinese grocery stores, and Chinese medicine. Some Chinese businessmen also opened businesses there. Figure 7 shows the stone marker and name of Baozen-ro at its entrance. Figure 8 is the right side of the same piece of stone marker with a quotation written in Chinese that translates as “This is Jeju’s first large-scale attraction of foreign visitors.” Figures 9 through 13 show a variety of shops that cater to Chinese visitors.
While the Baozen Cosmetics Company mainly wanted to promote its own business and reward its employees with a vacation, it also popularized a trend for Chinese tourists to visit Jeju Island to appreciate its natural beauty and other cultural assets. Some local businesses in or near the Baozen-ro neighborhood may have benefitted, largely hotels and restaurants, but the rest of Jeju island felt little the economic impact.
After the initial wave of Chinese tourists, Jeju tourism expanded with more tourists from China and Southeast Asia, Japan, Taiwan, and as far away as Europe. The 2010 provision for investment immigration encouraged developers to build large, luxurious condominium projects priced around the USD 500,000 per unit minimum for visa qualification. One of the earliest of these projects, the Raon Private Town and Resort, (Figures 14-18), is just a few kilometers from the white sandy beaches and harbor town of Hallim in the western part of Jeju Island.
The entire private town includes several rows of seven-story condominiums, a private hospital (called a hospital but more like a clinic and wellness center), a nine-hole golf course, a high-end shopping mall with famous designer name brand products, a coffee shop with bakery, an exquisite Chinese restaurant, a separate building for the Raon Hotel and Resort, a bar and grill, a convenience store, a real estate office, and a visa service office. At the time of writing this article, half of the foreign owned condominium units are owned by Chinese nationals. Given the high price of these housing units (by local standards), this development project was not built for local Jeju residents. But the size of the developed project is substantial (934 units) and takes up substantial land area that affects the overall environment of Jeju Island.
Driving around the project, one gets the impression that half the units are empty, but, in fact, most (if not all) the units have been sold, even if they are not always occupied. Chinese owners come perhaps once a year for vacation and to fulfill their presence on Jeju Island as required by the visa provision.
Another large-scale development project is the Jeju Healthcare Town and Resort located two miles directly north of the City of Seogwipo (second largest city on Jeju Island on its south central shore), see Figures 19-21. A Chinese state-run developer, the Greenland Conglomerate Group, along with Jeju Special Autonomous Provincial government, and Korea’s central government collaborated to make this as an international hub for medical tourism. In addition to condominium units, the campus includes a hospital which specializes in wellness, relaxation, cosmetics, skin care, and plastic surgery. The hospital also includes a research and development center (JDC, 2018). Figure 22 shows the hospital building. The land area occupied by this ongoing project totals 380 acres. Thus far, there are 400 condominium units, almost entirely sold. Unlike the condo units in Raon Private Towne, units here are on a time-share basis. Currently, Jeju Healthcare Town is also advertising for hotel rooms for rent (HTC, 2018) as part of the wellness center’s promotion of medical tourism.
On-site advertisement banners promote wellness activities, which include golf outings at nearby golf courses, fishing cruises, the Miniature World Theme Park, art galleries, and museums. A Chinese bank is on location. Figure 23 shows an advertising banner, which also emphasizes assistance with visa applications. Figure 24 shows the size of one of the buildings in the Town.
A few years after the immigration provision took effect, the Jeju Provincial government began to notice several problems with it. Not only were local Jeju residents unable to afford the condominium units that were built in response to the provision, but they also drove up the overall real estate prices on the island. Resentment built among local native Korean residents towards Chinese investors (J. Kim, 2014). The exact number of Chinese investors is unknown because some Chinese investors have purchased property through a third party or an agent to bypass registration with the Chinese government in an effort to hide overseas property (Lim, 2017) The Jeju Provincial government does not want to see the island being taken over by Chinese investors in the manner that the Japanese took over major properties in Honolulu in the late 1970s and early 1980s, but given the dynamic, questions arise about whether Jeju will turn into a Chinese paradise in 20 years as more and more investments and developments take place.
The island’s visa policy brought in 860 billion won ($830 million USD) just in the first six months of 2014 (Kim, 2014). It is not known how much return has been realized by the developers, however. Even though the units in Raon Private Town have been sold out, Chinese investors do not spend much time on Jeju because they have on-going businesses in China. Thus, the limited time they are on Jeju limits their spending on local entertainment and tourist industries. An exquisite Chinese restaurant at Raon Private Town closed for lack of business, high-end designer stores are barely hanging on (Chu, 2017). Lim Hyun-soo captures the main three areas of concern (Lim, 2017). The first relates to the limited benefit to the local economy. Only an estimated 10% of Chinese investors reside in the property they purchased; the rest are rental investments. Contracts for large scale construction projects benefit a Chinese conglomerate (The Greenland Group) rather than local Jeju or Korean owned construction companies. Jobs related to large development projects that hire Jeju residents are minimal, and mainly temporary in nature.
The second concern relates to the increase in cost of living and the price of land (Kang, 2015). Between 2012 and 2016, the Korean Ministry of Land, Infrastructure and Transport estimated that the land value on Jeju Island increased 40%. Chinese buyers are willing to pay several times the market value to own property, both commercial and residential. As a result, landlords prefer to lease or sell to Chinese investors rather than local tenants. Many local tenants were evicted and local businesses closed in favor of Chinese buyers. Jeju residents resent this and in part blame government officials who adopted the immigration policy that encouraged Chinese investment.
The third concern is environmental deterioration (Lim, 2017; Kang, 2015). Some of the Chinese development projects are situated in Jeju’s most diverse ecosystems. Jeju Island is full of heritage treasures and Jeju residents do not want to see them destroyed particularly on mid-level lands. It was unclear whether the Jeju provincial government has carefully weighed the long-term effects versus immediate but short-term gains. In addition, others question whether the medical tourism hospitals that focus on wellness, cosmetics, plastic surgery benefit local Jeju residents. Wellness and health practices popular with Japanese and Chinese (and some mainland Korean) customers, which get government support and resources for medical tourism, may take resources away from mainstream medical care (heart, lung, brain, cancer etc.) for local Jeju residents.
Even as it may be clear that foreign investments are only minimally benefitting local Jeju residents, there are still other projects either in development or in the construction stage. A very aggressive project, The Dream Tower Project, again developed by China’s Greenland Company, in coordination with Korea’s Lotte Tour Development Company, is estimated to invest USD 606 million to build a condominium/hotel complex complete with resort and a “foreigner only” casino on Jeju modeled after Las Vegas and Macau gambling establishments (Song, 2016). This project is expected to be completed by September, 2019 (Solana, 2016). But once again, no one knows how much such a project will benefit the local economy and/or add to job creation.
In spring 2017, the United States government agreed to install the Terminal High-Altitude Area Defense (commonly referred to as THAAD) in South Korea. Although it targets North Korea’s intercontinental ballistic missiles, China fears that such a system may also be used to spy on it. In response, the Chinese government has protested such installation to the U.S. and also discouraged and even prohibited Chinese investment in South Korea, and stopped all commercial flights to South Korea. All of a sudden, Chinese tourists stopped coming to Jeju. Jeju businesses experienced a sudden economic downturn (Zhen, 2017), as did businesses on mainland Korea. The Chinese also began boycotting anything related to South Korean on the Chinese mainland. Diplomatic relationships between the two nations stalled. China has the ability and power to economically starve any of its neighbors at will. The Chinese government had done that to Hong Kong when its democratic movements burgeoned. Dealing with uncertainties in Chinese government policies can be risky, especially when large sums of money have already been invested in development projects (Snyder, 2015).
At the end of October, 2017, China renewed diplomatic relationships with South Korea despite the presence of THAAD (Kim and Blanchard, 2017). The ban on Chinese airlines flights into Korea was lifted, Chinese tourists gradually returned. A popular Chinese foreign real estate investment website Juwai (Living Abroad), which is dedicated to helping Chinese find overseas property, surveyed Chinese respondents on their attitudes toward investment in Jeju and concluded that the interest had not waned (Juwai, 2017). Inquiries actually increased.
In the meantime, the Jeju provincial government faced an important decision relating to the 2010 immigration provision that allows permanent residency for a mere USD 500,000 investment amount which was set to expire in April 2018. Should it renew it? Many Koreans think that the Jeju provincial government has not carefully thought through the details of this provision. Unlike Canada’s provision, also intended to encourage foreign investment, the Canadian government demands a much higher amount in initial investment ($2 million Canadian) in addition to lengthier requirements for physical presence and more explicit taxation rules.
Jeju’s immigration provision was up for renewal by Korea’s central government in 2018. More in-depth analysis of the economic gains and losses as well as an understanding of local resentment and environmental issues should be taken into account. Will Jeju model be revised to be more like the Canadian provision? Will the central government completely abolish Jeju’s immigration provision? Will life return to a more normal and quiet pace for Jeju residents? Will Jeju’s beauty and environment resist further deterioration? In April, 2018, South Korea’s central government extended the immigration/visa provision and the Jeju provincial government concurred with the extension. But the dilemmas remain.
While the Jeju provincial government is still grappling with the dilemmas from Chinese investors, and medical tourism, a new, somewhat related, dilemma, unexpectedly arose. An unknown number of refugees from Yemen found their way to Malaysia and when Air Asia opened a direct route from Kuala Lumpur to Jeju in May 2018 more than 500 Yemeni refugees entered Jeju Island to apply for refugee immigration status in just two months. Korea then quickly removed Yemen as a nation for visa-waiver in order to stop this influx (Harris, June 2018). While their applications are being processed, they have been given a six-month grace period. Many Jeju residents have been very accommodating and hospitable in providing food and shelter (Bell, 2018), but more than 500,000 Koreans signed a petition calling for the removal of Yemeni refugees, citing the refugee problems encountered in Germany and Switzerland and did not want to see it happening in South Korea (Harris, 2018). At issue here are perhaps xenophobia, reduction of Korean population homogeneity (albeit so slightly), and job competition. This situation is unfolding as this article is being written.
The success or failure of a government’s immigration policy is such a complicated matter that it really requires a lengthy period before a valid assessment can be made. Questions of economic success or failure, benefits to or adversities for local residents, humanitarian aids, environmental degradation, resource sustainability, cultural acceptance, population homogeneity or diversity, community harmony, and other factors all must play different roles for such a policy to work. Korea, with its highly successful economic development during the past decades and with its demographic homogeneity, is beginning to face more global pressures as it contemplates its own immigration policies. Shawn Shen wrote:
Despite the noted increasing inflow of a variety of immigrant residents, who are constantly shaping the new faces of Korea, the acceptance of ethnic diversity and cultural integration has yet to secure its solid place in the Korean society for multiculturalism to be truly embraced and flourished. (Shen, 2017)
Hopefully, Jeju’s current immigration status will offer additional insight to guide future decisions that allow for improved immigration policies for the island and the country as a whole.
The author is grateful to the Korean Geographical Society and the National Geographic Information Institute of South Korea for their support while conducting research and interviews on Jeju Island. The author is indebted to Mr. Park Taehun for his expert analyses of geographic issues on Jeju Island and for his field trip guidance. Gratitude is expressed to the anonymous reviewers who made valuable suggestions.
Photograph of the author was taken in front of the Geographic Bar in 2004 in a seaside neighborhood near Xabia on the Mediterranean Coast of Spain. The bar still exists under the same name but the façade has changed.