By Park Jae-hyuk







Investors have dumped AmorePacific shares in recent weeks as Beijing cracks down on Chinese travelers who return home with luxury items and sell them at a profit, according to securities analysts Sunday.







Shares of the cosmetics giant dropped by 1.1 percent to 225,000 won ($199) Friday from 227,500 won Thursday, following a 13.99 percent decline in the previous session.







The plunge came after a China National Radio report quoting a Shanghai customs official, saying Chinese citizens returning from overseas trips should declare goods if they exceed the duty-free allowance of 5,000 yuan ($727).







A customs receipt of a traveler, who uploaded the document on social media, showed an imposition of a 60 percent tariff on some cosmetics. Some users of Chinese social media WeChat complained of heavy import taxes that customs authorities slapped on the purchase of luxury cosmetics.







J.P. Morgan analysts said the tougher border control may have been taken to regulate the practice of reselling luxury goods at a profit bought from overseas.







They said the main target of the regulation will be products from Korea accounting for 1.5 percent of global luxury sales. "Tougher border controls have been in place since 2015, and recent customs scrutiny has probably focused on travelers coming from Korea," analysts at J.P. Morgan said in a report.







Analysts said in a note to investors that they see cosmetics and toiletry share prices remaining vulnerable to China-related news because Chinese consumers account for a higher ratio of sales growth.







Analysts regard the tightened border enforcement as China's attempt to boost domestic consumption and reduce outflow of foreign currency, amid the economic slowdown following the intensification of the U.S.-China trade war.







Against this backdrop, AmorePacific said it has nothing to comment on about the Chinese government regulation.







"It is true that our shares have plunged recently, but we are trying our best to improve our business performance," an AmorePacific spokesman said.







Korean analysts also expect the company will face difficulties in the Chinese market.







"High-end brands account for less than 20 percent of AmorePacific's sales in China," KB Securities analyst Park Shin-ae said. "Budget brands will unlikely enjoy rapid growth in China due to fierce competition with local brands."

