Posts Tagged ‘tourism’

Clarifying the economic damage of the Senkakus row

Wednesday, October 17th, 2012

Prepare for descent.

Japanese conservatives contend that people should not get “emotional” about the economic consequences of the current row with China over the Senkaku islands, implying that some things are more important than money. But what exactly are the economic consequences given that since 2009 China has been Japan’s biggest trading partner?

According to the Finance Ministry, one-fifth of total Japanese exports in 2010 went to China, while the same portion was 7.7 percent in 2001. A Reuters analysis shows that Japan would suffer mightily if trade stopped, citing an annual loss of ¥12 trillion if exports went down to zero for only one month. Under such conditions, automobile companies would be the main loser. They’d lose ¥144 billion. Bank of America estimates that 25 percent of all Nissan’s profits are derived in China, 21 percent for Toyota and 16 for Honda.

Moreover, Japanese companies directly invested ¥1 trillion in China in 2011, 60 percent more than what they spent in 2009. China’s Bureau of Statistics says that as of the end of 2010 there were 22,307 joint Japan-China ventures operating in China comprising 3 million workers and accounting for 16 percent of all the country’s foreign-related companies.

Still, the sector that tends to get the most media attention in Japan is tourism, since visitors from China spend more here than visitors from any other country. According to the Asahi Shimbun, China’s state tourism agency, which controls some 5,500 travel agencies all over the country, has stopped selling tours to Japan for the time being. Cancellations of reservations already made amount to about 500 million yuan, or ¥6.2 billion.

For the big vacation week of Oct. 1, there were at least 10,000 cancellations. China said it originally expected to sell some 45,000 individual tour packages to Japan for that week. On the other hand the agency said that the number of Chinese tourists who visited South Korea during the big vacation week was 125,000, a new record. They spent the equivalent of ¥190 billion, according to South Korea’s retailers association. Department stores and duty-free shops, in particular, did booming business.

Japanese companies lose less with cancellations of Japanese tourists going to China, but the cancellations do have an effect on Japanese airlines and tour packagers. Various media have reported that there were around 52,000 seat cancellations on flights between Japan and China as of September 24, with 37,000 on ANA and 15,000 on JAL. Many of these cancellations were Japanese business travelers, who tend to pay premium prices for tickets.

Japanese tour companies suffered, too. China and South Korea are always two of the top three destinations in terms of number of Japanese tourists, and Sankei Shimbun reports there has been a 30-45 percent decrease in the number of tours to these two countries in the second half of the year compared to the same period last year. This negative effect spreads to other sectors, since tourist companies are also not bothering to advertise. They say it would just be a waste of money.

Summertime blues: no place to go or no money to spend?

Friday, August 10th, 2012

Last week, the research department of Meiji Yasuda Life Insurance released the results of its annual summer vacation survey. For the second year in a row, projected spending for summer vacation dropped from the previous year’s spending. On average, households say they plan to spend ¥82,974 this year, down from ¥84,848 last year. It is not the lowest amount on record, however. In 2008, households said they would spend ¥76,955, but that was the year after the subprime crisis and the Lehman Brothers “shock.” The next year, spending recovered but has been declining ever since.

What the roads won’t look like in the middle of August.

Yasuda hasn’t analyzed these findings, so it’s not entirely clear if the reason for the decline is lack of disposable income due to the ongoing recession or fear of spending any money because of an uncertain future. However, the amount of spending jumps considerably when children aren’t involved. Households consisting only of couples said they would spend on average ¥100,191, which is much more than it was last year. A relatively large number of couples say they will be traveling overseas.

In any case, the majority of all respondents said they would stick close to home this summer, 62 percent, to be precise. It’s the seventh year in a row that “staying at home” topped the list of answers to the question, “What do you plan to do?” Other answers (respondents can tick more than one) included “return to my home town” (39.4 percent), travel domestically (37.4 percent), and visit theme parks, public pools, camping sites, etc. Among the reasons given for staying at home this year, the most common was “to recover my strength,” followed by “it costs too much to travel.”

It’s unfortunate that Yasuda didn’t get even more detailed in this line of inquiry. For example, of the people who said they would visit their home towns, 52 percent also said they would get there by automobile. Considering the monumental “u-turn rush” traffic jams that occur during the specified holiday period, it might have been interesting to find out how many people decided not to go home because of traffic jams and crowded trains. It’s easy to blame apathy about summer vacation on economics, but logistics has a lot to do with it, too, especially when they’re qualified by financial considerations. These things all go together.

Play money: Forgotten fate of foreign currency

Monday, June 4th, 2012

Stuff old people bring back from abroad

The magazine Travel Journal recently reported the results of a survey carried out by the Ministry of Internal Affairs among 7,829 travelers after the recent Golden Week holiday. The ministry asked people who had changed yen into foreign currencies how much of that money was left over in cash after they returned to Japan. The average amount of foreign cash remaining among those who responded was the equivalent of ¥38,871. Somehow, the ministry extrapolated this figure to reach the conclusion that, nationwide, there is about ¥1.3 trillion worth of foreign currencies sitting around in people’s dresser drawers or stuck in the back of wardrobes, which is a lot of money.

The survey also found out that the average Japanese traveler going overseas exchanges ¥71,940 on each trip, and spends about 70 percent of that money. The average amount of cash that is stolen from a Japanese robbery victim overseas is ¥65,730 per incident. In 12 percent of the cases, more than ¥100,000 in equivalent cash is stolen from Japanese victims. In 1 percent of these cases the amount is over ¥1 million.

For better or worse, Japanese tourists are famous in foreign countries for carrying a lot of cash, presumably because in Japan merchants still prefer transactions in cash and Japan is a relatively safe country for doing so. It’s one reason why Japanese tourists spend so much in airports. They feel the need to get rid of their foreign cash, even if it’s spent on things they don’t need. Japan Travel also comments that older Japanese people, who tend to travel in tour groups, rarely think about the exchange rate, and especially now with the yen so high may end up exchanging more yen than they really need.

Since this forgotten foreign currency in homes is likely worth less that it was when the exchange was originally made, people may not be so enthusiastic about trading it in for yen, at least not right away. Still, the government must surely be wondering how it can get its hands on it. Travel Journal says the Ministry of Internal Affairs is thinking of launching a “donation” campaign for the money. We can imagine the catch copy: “You can’t spend it here, so why not give it to us?”

How high is up: Tokyo Skytree boosts economy for some

Thursday, May 31st, 2012

There’s a Japanese proverb that goes something like: Smoke and stupidity always rise to the highest places. It’s a useful saying when talking about the media frenzy regarding the Tokyo Skytree, which opened to the public May 22. Though it’s not our mission to ponder the psychology of why people like to go to the top of very tall structures and look down on everyone else, whatever the attraction, it hardly justifies the redundantly blanket media coverage of the new broadcast tower in Tokyo’s Sumida Ward. Of course, the Tobu Railway group, which owns and operates the tower, couldn’t have asked for better publicity. The number of visitors has so far exceeded its own estimates by 50 percent. No one has bothered to calculate the equivalent value in advertising that this free PR represents but it must

Skytree crowds on opening day (Satoko Kawasaki photo)

be in the billions of yen. And it’s paid off. As of last February, group reservations for tickets to the upper observation deck were booked until July 22, amounting to some 300,000 separate admissions. Because a number of people cancel on a daily basis, the operator of the 634-meter tower has decided to sell an additional 1,000 tickets a day to the lower observation deck (350 meters) between June 4 and July 10 at ¥2,500 a pop. The limit for daily admissions is 14,000, but after cancellations the number that have actually shown up is between 12,000 and 13,000. Altogether, 1.4 million
visitors have been in the tower, 85,000 of whom went to the upper observation deck (450 meters), which costs ¥3,500. Reservations must be made with a credit card (only those issued in Japan are acceptable), and there are no refunds. At those prices and those numbers, it should be no problem for Tobu to pay off its massive ¥400 billion construction cost in a matter or years rather than decades.

Tobu isn’t the only party counting on the Skytree to boost its financial situation. Tokyo Shimbun reports that the “economic impact” of the tower should also be felt nationwide to the tune of ¥174.6 billion and in the Tokyo metropolitan area by as much as ¥130 billion. Even more impressive, Sumida Ward expects ¥88 billion, and that’s just in income. Of the eight Tokyo districts where property values rose in 2011, two are in Sumida Ward near the Skytree. However, according to the Mainichi Shimbun there is some talk among Sumida residents of just how much they themselves will benefit in the balance. About 32 million people a year are projected to come to Tokyo Skytree Town and its retail complex Solamachi, which is considerable given that annual admissions to Tokyo Disneyland and Disney Sea total 25 million. But the surrounding area is more residential than commercial and while local merchants are trying to make the most of the tourist windfall, those who simply live there are wondering if the boost is worth all the trouble. How the influx compromises public safety

The other New Year: Can Chinese prop up J-retail?

Wednesday, February 10th, 2010

Celebrating Chinese New Years at Llaox

Celebrating Chinese New Years at Laox

The sorry state of Japanese department stores has one hopeful sign: Chinese tourists seem to love them, or, at least, the richer tourists do. According to TV Tokyo’s “Business Satellite,” many of Japan’s nicer department stores are directly catering to Chinese visitors, who are reacting favorably to the attention by whipping out their Union Pay cards, which qualify them for discounts at a lot of Tokyo retailers, including most of the electronics stores in Akihabara.

And right now is the prime time to catch them since it’s Chinese New Year when Chinese people traditionally open their purses and spend big. If you go to the Laox Duty Free store on Akihabara’s main drag you’ll see tour bus after tour bus pull up in front and disgorge happy shoppers from the mainland, Hong Kong, Taiwan and Singapore.

It’s more than just the duty-free aspect that brings them to Laox. The company went through a thorough reorganization last year that involved the closing of most of its suburban branches and a hefty investment from a Chinese company. In fact, the president of Laox is now Chinese, and he’s made sure that every tourist who comes to Japan has the Akihabara store on his or her itinerary. Since the store reopened in October, sales have been very good, since the buyers have focused on merchandise that specifically target Chinese rather than Japanese.

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