Japan firms brace for impact from China's virus-related ban on outbound group travel

China’s ban on all outbound group travel to stop the deadly coronavirus from spreading comes as a blow to Japan’s retail and tourism sectors, which had been counting on robust spending by Chinese visitors during the Lunar New Year holidays.

“We may see an impact on our sales, as 80 percent of visiting foreign customers at our flagship Hankyu department store in Osaka are Chinese,” an official of operator H2O Retailing Corp. said of the group travel ban imposed Monday.

Sales at department stores in Japan slumped in 2019, falling 1.4 percent from the previous year on a same-store basis for the second straight year, with the drop blamed on bad summer weather and a warm winter.

“If the number of foreign visitors drops, the bustle in cities will certainly fade,” said a 50-year-old restaurant operator in Tokyo’s Ginza district, a popular shopping area for Chinese tourists.

A 43-year-old woman operating a shoe store in Ginza said: “At this time of year, sales are usually weak. On top of that, I’m wondering whether customers from China will stop coming.”

Analysts at Nomura Securities Co. estimate that a 10 percent fall in the annual number of foreign visitors would lop 0.1 percent off Japan’s gross domestic product.

Hidenori Suezawa, a financial and fiscal analyst at SMBC Nikko Securities Inc., said that on top of the fall in inbound visitors, a spread of the virus in Japan could lead to people going out less and cause cancellations of events, pushing down consumer spending.

An official at a major hotel chain said the Chinese travel ban was “disappointing” since it comes as at time when Japan was preparing to attract overseas visitors ahead of the 2020 Olympic Games.

“But we want to respond calmly,” the official said.

Other analysts pointed to the potential impact on major Japanese manufacturers due to disruptions in supply chains. Wuhan, the central Chinese city where the virus originated, is home to manufacturing plants belonging to automakers Nissan Motor Co. and Honda Motor Co., as well as France’s Renault SA.

Japanese tourism companies were busy responding to cancellations of tours by Chinese travelers, who have been a major source of revenue for them.

Hato Bus Co., is known for offering tours around Tokyo, said Chinese tourists, including two from Wuhan, had canceled their tours.

The operator will install disinfectant alcohol in all of its buses starting Tuesday.

The decrease in Chinese visitors comes as a setback for Japan’s goal to attract 40 million visitors from overseas this year.

The number of Chinese travelers jumped to 9.59 million in 2019, a twentyfold increase from 2003, buoyed by gradual easing of visa requirements.

At present, Chinese account for 30 percent of the total number of foreign visitors to Japan, and have been the largest group since 2015.

Round-trip flights connecting China and Japan reached 1,400 a week in the current wintertime flight schedule from October to March, up 19 percent from the summertime schedule from April to September.

An official at a private railway operator, whose earnings have been lifted by inbound visitors, said that “it would be severe if China goes as far as banning travel by individuals. We had expected a rise in passengers during the Lunar New Year holidays.”

A senior official at the Japan Tourism Agency said: “We still cannot see the extent of implementation of the group travel ban, but there is no doubt that customers from China will drop.”