The government has been taking steps to lure more foreign tourists to Japan and get them to spend more, such as expanding the scope of tax-free shopping for visitors from overseas beginning this month.
Local authorities and businesses around the country should also seize the opportunity to bring more tourists to areas outside the typical destinations of foreign visitors and let their spending be a driving force for the nation’s rural economies.
The yen’s renewed fall against the dollar in recent weeks will be a mixed blessing for the Japanese economy, with the export-led firms likely to benefit more, but the rising costs of imports and fuel prices are expected to hit many businesses and households.
But the weaker yen will certainly make Japan a more competitive tourist destination for foreign visitors, whose numbers topped 10 million for the first time in 2013 and continues to rapidly increase.
Aided by robust travel demand from East Asian countries, the number of foreign visitors reached 8.63 million in the January-August period, and officials estimate the annual figure will reach 12 million.
Travelers from China in the first eight months surged 84 percent from a year ago to 1.54 million, already topping the previous annual record set in 2012. The government has set a target of increasing the number of visitors to 20 million by the time Japan hosts the 2020 Summer Olympic Games.
Such robust figures for inbound tourism point to the strong purchasing power of foreign visitors. While the number of visitors in 2013 increased 24 percent from the previous year, their total spending surged 30 percent to about ¥1.42 trillion, including lodging expenses.
Retail and tourism industries see a big potential for spending by inbound tourists, at a time when the prospects for domestic demand is clouded by the population downtrend.
The Oct. 1 expansion of the scope of consumption tax-free shopping is one of the measures aimed at further increasing such spending by visitors.
The tax-free shopping had earlier been limited to “nonconsumable” products such as electric appliances, clothes and bags, while liquors, cosmetics and confectioneries — items popular among foreign tourists — were not included. Now purchases of goods priced from more than ¥5,000 to ¥500,000 are tax-exempt.
Foreign visitors are estimated to have spent about ¥460 billion — or roughly 30 percent of their total expenses — on shopping last year.
Asian tourists were the biggest shoppers, led by those from China. A Chinese tourist spent roughly ¥120,000 on average in the April-June period, much higher than the ¥24,000 spent by an average traveler from the United States and more than double the average among all foreign visitors.
Tax-free purchases at department stores by visiting tourists in August rose 41 percent from a year before. Major retail group Mitsukoshi-Isetan Holdings is expanding the duty-free counters at its stores nationwide to meet the anticipated growth in sales.
One problem is that retail stores that can cope with the procedures for duty-free sales are still limited in number and concentrated in large metropolitan areas like Tokyo and Osaka. About 30 percent of Japan’s 47 prefectures each had less than 10 duty-free shops as of April.
The government aims to increase the number of duty-free shops from around 5,800 today to 10,000 by 2020. Retail businesses across Japan will need to make greater efforts to tap into the potential demand from visiting tourists to sell their local specialities.
Although the number of visitors is rising rapidly, Japan is still ranked 27th in terms of inbound tourism, lagging far behind other advanced economies as well as many Asian countries. International tourist arrivals in Japan are roughly one-fifth of those who visit China and less than half the numbers who go to Thailand or Malaysia.
Large metropolises like Tokyo and popular tourist destinations like Kyoto and those around Mount Fuji continue to attract many foreign visitors, but to bump up the inbound tourism, each region needs to wisely identify what it has to offer that can attract tourists from overseas, be it their specialities, scenic beauty, historical relics or events.
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