Japan continues to reinforce its position as an increasingly popular Tax Free Shopping (TFS) destination, driven by the continued influx of Chinese inbound visitors and a robust government-supported marketing campaign. The country’s popularity is also showing signs of resilience against negative currency FX.
Global Blue’s May data show Chinese globe shopper transactions up +21% in Japan, an indication of higher visitor numbers and alongside a similar rise in the number of tax-free forms issued. This follows rises in transactions of +19% (April) and +33% (March).
Japan’s popularity among Chinese inbound visitors has grown over the past year, largely in part to favourable currency FX, new airline routes and more relaxed visa regulations.
In 2015, Japan welcomed a record 19.73 million international visitors. China has now overtaken South Korea as the leading source market, accounting for one in four visitors to Japan. Close to 5 million Chinese visited last year, up from 2.4 million, according to the Japan National Tourism Organization (JNTO).
The Japanese government has made clear its ambitious aims to double international visitor numbers to 40 million by 2020, the year of the Tokyo Olympics, with Chinese travellers a key part of that strategy.
Latest JNTO data show last year’s momentum to be continuing. In April 514,900 Chinese visited Japan, up 27% YoY, due to the peak Sakura (cherry blossom) travel period. The uplift followed surges in March (+47%) and February (+39%).
Shopping, food and culture
In Global Blue’s monthly TFS data, Japan is now consistently one of the top two markets for share of Chinese globe shopper spend, alongside France.
Much of the Chinese traveller boom to the country has been fuelled by favourable currency FX. Despite recent currency movements that have put pressure on Japan and impacted Chinese purchasing power, the upswing in visitor numbers remains unchecked. For the inbound visitor, particularly Chinese, Japan ticks several boxes as a favoured destination for experiential travel encompassing food, nature and culture.
Charting tourism interest in Japan, TripAdvisor found a year-on-year (YoY) rise of +15% among all global travellers. Interest among Chinese travellers surged to 130%, well above the global average.
Cultural attractions and outdoor activities appear to be of growing appeal to global visitors with areas including Osaka, Kanazawa, Onna-son and Ishigaki among those seeing the biggest increase in interest.
Among wealthy Chinese millennial travellers, Japan’s shopping, food and culture made it the most memorable destination in 2015 in the latest Hurun survey. For this cohort of travelers, proximity to China also made it the most visited over Chinese New Year 2016.
Higher traffic, lower spend
Japan’s TFS data is primarily driven by volume. In May growth in average transaction values by Chinese globe shoppers fell -30%, even while visitor numbers grew. This is a steeper decline than in previous months of -19% and -9%, respectively, and could be a further sign of the shift towards mass within Japan’s tourism industry.
Average spend per transaction is now €453, as Chinese travellers redirect spend away from higher-cost purchases of luxury watches and jewellery, and consumer electronics, towards cosmetics, medical supplies, food items and fast fashion. This is adding further pressure to the Japanese luxury market where domestic consumer spending remains suppressed, despite the government’s decision to delay a proposed sales tax hike to boost local spending.
While Beijing and Shanghai remain the two main sources of Chinese travellers to Japan, a report by online travel agency Ctrip found that visitor numbers from second and third tier cities are surging. YoY growth from cities including Tianjing, Shenyang, Hangzhou, Wuhan and Qingdao is between 300-500%.
In response to the rise in Chinese visitor numbers, Japan’s retail offer is adjusting accordingly and retailers have put in place Chinese-speaking staff, international customer service desks, new payment systems and wifi-enabled stores to ensure visitors can keep connected.
Spaces carrying top-selling products such as souvenirs and cosmetics are increasingly common to target Chinese travellers, as are new-format, airport-style duty-free stores in downtown locations tapping into a healthy interest in duty-free shopping.
Department store Mitzukoshi opened a duty-free corner in its Ginza store in January, followed by the first of Korean retail group’s Lotte Duty Free stores in March. The latter is planning to open fives stores over the next five years including further stores in Tokyo as well as Osaka.
Other Japanese department stores are following suit, including a duty-free offer in the Takashimaya Shinjuku store for Spring 2017.
Worth ¥160 billion, Japan’s duty-free market is one-sixth the size of nearby South Korea, indicating there is room for growth.
Global Blue takeouts:
• Japan is becoming a mass tourism destination for Chinese travellers, characterised by higher inbound numbers and lower per-visitor spend.
• Chinese traveller preferences for food, shopping and culture play out well for Japan, which global travellers rate highly for these attractions.
• Pressure on the Japanese luxury market is set to continue as visitors turn away from luxury shopping and consumer electronics to buy into cheaper products such as cosmetics, foods and mass-market fashion.
Global Blue corporate data reporting includes Tax Free Shopping (TFS) transactions from our key TFS destination markets across EMEA, Asia and Americas, where more than 24 months of back data is available. Global Blue data points referenced within our corporate content may vary from other third party reports that publish our data, due to different parameters set by these third parties.