Business / Economy

Despite continuation of intel pact, Japanese businesses see little hope for early recovery of ties with South Korea

JIJI

Despite Seoul’s eleventh-hour decision on Friday to effectively extend its military information-sharing pact with Tokyo, Japanese businesses appear to have little hope of an early recovery for bilateral ties due to the lack of a resolution of the wartime labor issue.

Opinion polls have shown that South Koreans’ views of Japan have also deteriorated after Tokyo tightened controls on exports of key semiconductor materials to the country in July.

The soured ties have brought severe negative effects on the tourism and distribution industries in Japan and on its firms operating in South Korea.

By virtue of proximity, the Kyushu region had profited handsomely via tourism from the country. Recently, however, Kyushu hotel, bus and department store operators have seen the number of South Korean customers plunge dramatically.

“It makes no sense to promote our services in a country with little benefit,” said an official with a major department store in Fukuoka. The store is now bolstering its push to attract Chinese customers as the number of South Korean visitors dwindles.

At a ryokan (Japanese-style inn) run by Yoshihiko Shimizu, 65, in the Yufuin hot-spring resort area in Oita Prefecture, the number of South Korean guests has plummeted 80 to 90 percent.

“Repeat guests from South Korea have yet to visit my ryokan this year,” he said. “I don’t want the bilateral relationship to deteriorate any further.”

The number of South Korean visitors to Japan has plunged to one-third of the level year-on-year, according to Japan National Tourism Organization data.

South Korean airlines have reduced their flights to and from Japan by 40 percent.

Oita Airport, for example, used to have 13 scheduled flights to South Korea per week, but all have been suspended.

Even Japan’s biggest firms have been negatively impacted by the row.

Sales of Toyota Motor Corp.’s Lexus luxury brand cars in South Korea dived 80 percent year-on-year in October, while Asahi Breweries Ltd. is expected to lose its position as the top beer importer in South Korea after holding the title for eight years in a row.

Apparel-maker Onward Holdings Co. has decided to withdraw from the South Korean market, with its sales slumping there amid growing anti-Japanese sentiment.

“We have no choice but to wait for the bilateral problems to be sorted out by politicians of the two countries,” said an official with a major Japanese automaker.

“Major progress was made,” said Akio Mimura, chairman of the Japan Chamber of Commerce and Industry, referring to South Korea’s decision Friday to effectively extend the two countries’ General Security of Military Information Agreement.

The announcement came only hours before the pact’s scheduled expiration at 12:01 a.m. Saturday. In August, Seoul announced it would not renew the pact due to the rapidly deteriorating bilateral relations.

Still, Mimura indicated the need to keep a close watch on further developments.