Decline in South Korean tourists takes toll on small Japanese firms

Head to the winding streets of Tokyo’s trendy Omotesando district on any given day and you’ll see young South Korean women taking selfies in front of popular cafes or snapping photos of their logo-emblazoned coffee cups.

But behind that familiar scene, employees at those cafes have seen a different picture in recent months — dwindling numbers of visitors from Japan’s neighbor amid a spiraling bilateral dispute that has as yet no end in sight.

Operating out of a plain wooden building, the peaceful, rustic ambiance of Shozo Coffee’s Commune 246 store reflects its origins in the rural town of Nasu, Tochigi Prefecture. Along with drip coffee, its specialty is scones.

Koreans have usually accounted for around 40 percent of the store’s customers, said staffer Noriko Kogure, making them the biggest group of foreign visitors.

They started flocking there after Blue Bottle Coffee, a high-end retailer headquartered in California, opened a branch next door, she said. The cafe’s quirky appearance then helped make it an “Instagrammable” spot, with word of mouth spreading digitally among Korean visitors.

In 2018, Koreans made up almost a quarter of all foreign tourists in Japan, spending ¥588 billion ($5.5 billion). They were second only to mainland Chinese, who accounted for 27 percent.

But bilateral relations have deteriorated sharply since the South Korean Supreme Court ordered two Japanese companies last year to pay compensation for wartime labor during Japan’s 1910-1945 colonial rule of the Korean Peninsula.

The row, which developed into a tit-for-tat trade dispute, has led to cancellations or reductions of flights linking cities in both countries, damaging tourism to Japan.

For Shozo Coffee, which used to get around 50 groups of South Korean customers per day, the decline has been significant at times.

“There have been days where we only get one group of South Korean customers,” Kogure said.

In an online survey of around 530 South Korean travelers from Aug. 23 to Sept. 2, the Korea Culture and Tourism Institute, a government think tank in Seoul, reported that 69.3 percent had canceled trips to Japan. Among them, 93.2 percent cited strained relations as the reason, with 36.1 percent saying they would like to resume travel to Japan if relations improve.

Outside of Tokyo, the impact has been even more significant in regions where Koreans make up the lion’s share of visitors.

Tsushima, halfway between Kyushu and the Korean Peninsula, has been hit particularly hard. The island in Nagasaki Prefecture is accessible from Busan via high-speed ferry in about an hour, with passengers from across the sea accounting for 75 percent of all visitors.

The island, which has a population of 30,000, saw around 410,000 Korean tourists visit last year. They spent an estimated ¥7.94 billion in 2017.

But almost half of the 25 main accommodation facilities on the island have reported occupancy rates for July dropping 50 to 90 percent compared with the same time last year.

The figures for August were also down, with ferry services canceled or reduced due to the drop in passengers.

A hotel situated around five minutes’ walk from Hitakatsu port, where the majority of South Korean tourists enter the island, said they received around 170 cancellations in July.

“We still get individual tourists but bookings by tour groups are almost zero, and half our rooms are empty. Who knows how long this will go on?” lamented a 29-year-old Korean staff member.

Facing the port, a cafe targeting South Korean tourists is filled with empty seats.

“In the three years since this cafe opened, this is the first time I’ve been so free every day,” said employee Hiromi Hara, 46.

The Japan Tourism Agency recently released figures showing that South Korean visitors to Japan had tumbled 48.0 percent in August from a year earlier to 308,700. This was despite overall tourism figures dropping only 2.2 percent.

“It’s a bit lonely. It’s a political issue, so ordinary Koreans don’t hate Japan. They just can’t come because there are fewer flights or just due to the general atmosphere,” said Keisuke Maehara, owner of Number Sugar, an all-natural caramel store in Tokyo’s Omotesando district.

With South Koreans making up around 20 percent of the store’s customers and around 70 percent of foreign customers, there has been a noticeable decrease over the past two months, he said.

The store has drawn in South Koreans mainly for its signature item — a simple yet elegantly packaged selection of caramel sweets in 12 flavors. Snaps of the square white box and its colored ribbon are often posted on Instagram.

“It doesn’t matter if they are Korean or Japanese, it just makes me happy to see people enjoying our caramel,” Maehara said, adding that he looks forward to the South Koreans returning.

Over in the upscale Hiroo neighborhood, the impact has not been so evident for Nuts Tokyo, a cafe based on the concept of healthy and nutritious nuts.

Although South Korean visitors make up 20 to 40 percent of customers, drawn to the store’s signature peanut butter sandwich, limited to 15 servings a day, it has largely been business as usual.

“There hasn’t really been any change at all,” a staff member said.