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Chinese shoppers keep Japan’s tills ringing

by and

According to the English-language Japan news site RocketNews 24, a few weeks ago two families got into a fight at a large retail outlet in Kobe over disposable diapers. Both families had come to the store when it opened in order to buy as many diapers as they could, only to discover that the store had already sold out. Apparently these two families knew each other from previous diaper-buying binges and harbored mutual resentments that turned physical. A store employee called the police, who broke up the fight. Neither party filed a complaint or disclosed what the argument was about.

RocketNews speculates that the two families resell the diapers in China, since both have members who are Chinese nationals. Japanese diapers are particularly popular in China, and, in fact, this particular brand — Merries, made by Kao — is sold in China. Nevertheless, there’s obviously enough demand to support a lucrative resale market.

It’s not as if the Chinese don’t make and sell their own disposable diapers, but when it comes to their children, consumers will pay a premium for Japanese products because they don’t trust domestic makers. This sensibility has been growing since 2008, when locally made baby formula caused the deaths of six children and sent thousands to the hospital after somebody adulterated it with melamine to make it seem as if the protein content was higher.

It is illegal to import Japanese formula made in certain prefectures because of radiation fears, but apparently there’s substantial black-market trade in the product. Last month, 425 kg of smuggled formula made in Gunma Prefecture was discovered by authorities in Hunan province with an estimated retail value of ¥800,000.

It’s often said that despite the diplomatic frictions that exist between Japan and China, they are dependent on each other economically and, as far as Japan’s dependence goes, it is very much influenced by Chinese consumers’ trust of Japanese products, which runs pretty deep.

Some economists thought that China’s stock market plunge and the resulting government-approved devaluation of the yuan would hurt sales of Japanese goods both in China and in Japan, where Chinese tourists seem to be supporting the Japanese economy. But according to Luo Yiwen, the president of home electronics retailer Laox, speaking at an Aug. 13 news conference, the stock and currency issues aren’t having any negative effect on sales at his store’s duty-free shop, which caters mainly to Chinese visitors. As it stands, sales for January to June at the shop have more than doubled since the same period in 2014 to ¥45 billion, with profits increasing nearly eightyfold to ¥4.6 billion. Laox received 1.49 million Chinese customers last year, four times the number for the previous year, and “much more than we expected,” he said. He predicts not only that the devaluation of the yuan will not hurt sales, but that they’ll go up even more. He projects a net profit this year of ¥8.3 billion on sales of ¥90 billion.

The two reasons for the strong Chinese tourist market are the lower yen and fewer visa restrictions for Chinese tourists. The Nihon Keizai Shimbun cites a third reason: more cheap flights between China and Japan thanks to the proliferation of low-cost carriers. The economic value of Chinese tourism in Japan bottomed out in 2011 at ¥813 billion due to the March 11 disaster, but rebounded to ¥1.8 trillion the next year. In 2014 the economic value was ¥2.3 trillion.

In that year, 2.4 million Chinese came to Japan, which is actually less than the number of visitors from Taiwan, which was 2.8 million. The difference is that per person, the Chinese spent more: ¥231,000 compared to ¥125,000 for the Taiwanese and ¥147,000 for visitors from Hong Kong, who are counted separately from mainlanders.

In fact, Chinese account for one-third of all the tourist money spent in Japan, and this figure is rising. The amount of money Chinese visitors spent increased by 83 percent from 2013 to 2014. More to the point, 55 percent of the money Chinese spend in Japan is for shopping. For all tourists, the average spent on shopping is 35 percent. In contrast, Chinese spend less on accommodation than visitors from other countries, which suggests they are more concerned with buying stuff than sightseeing.

Also, according to a Tourism Agency survey cited in the Nikkei, it isn’t just rich Chinese who are spending. More middle-class Chinese are coming and buying things. Broken down by category, the agency says that 76 percent of Chinese buy “confections,” 63 percent cosmetics and perfume, 55 percent food, liquor and cigarettes, and 52 percent drugs and toiletries. Only 37 percent buy appliances, but when they buy them, they buy a lot. The average spent by all foreign tourists on electronics is ¥65,000. Chinese on average spend ¥88,000.

Chinese tourists, in fact, seem to be single-handedly keeping Japanese department stores in business. Although airport duty-free shops are the main venue for Chinese purchases followed by “shopping centers,” department stores that offer tariff-free sales to foreigners are a strong third and, according to the Nikkei, the reason is that they know the designer brands they buy in department stores are “authentic,” meaning not knock-offs. (For what it’s worth, both real designer goods and their fake counterparts tend to be made in China.) And if it seems unwise to purchase such goods in department stores, which tend to charge more, they’re likely still cheaper than those bought in China, which may be subject to tariffs.

Yen for Living covers issues related to making, spending and saving money in Japan on the second and fourth Sundays of the month. For related online content, see blog.japantimes.co.jp/yen-for-living.

  • keratomileusis

    Good news for retailers. Bad news for the government since the consumption tax is exempted. Good news for the government in that tourism bolsters low spending by Japanese. Bad news because it’s a relatively small amount.

    • socrateos

      > Bad news for the government since the consumption tax is exempted…

      Still it is a good news for the government because of wage increase possibility due to brisk sales.