Japanese retailers worry Chinese tourists will spend less this Lunar New Year

TOKYO (The Japan News/ANN) – With the Lunar New Year holidays in China starting today, a busy period for retailers as Chinese tourists to Japan increase around this time of year, concern is spreading among retail businesses over a lowering of Chinese consumers’ desire to spend money this year due to the slowdown of Chinese economic growth and the recent strengthening of the yen.

Last Friday, four major department stores released their sales of tax-free goods in January and all of them registered year-on-year declines, with Takashimaya Co decreasing 15 per cent from a year earlier, Isetan Mitsukoshi Holdings Ltd declining 6.6 per cent, Sogo and Seibu Co dropping about 10 per cent and Daimaru Matsuzakaya Department Stores Co falling about one per cent.

Isetan Mitsukoshi recorded a fall in monthly sales on a year-on-year basis for the first time in about two years. The decline in sales was particularly steep at three major stores in Tokyo that draw a lot of tourists — Isetan’s Shinjuku store and Mitsukoshi’s Nihonbashi and Ginza stores — where sales were down 10.2 per cent.

An official of Isetan Mitsukoshi’s public relations section said with worry, “As the future of the Chinese economy is unclear, consumers’ behaviour is changing. The declining trend could continue for the present.”

The phenomenon is also seen in the Kansai region, where many foreign tourists visit. Sales of tax-free goods in January at Takashimaya’s Osaka store decreased by 20.5 per cent.

One of the reasons for the sluggish sales of tax-free goods is that the Chinese government has strengthened its legal regulations on e-commerce transactions since January. When people sell purchased products online on e-commerce sites in China, the operators are required to register with the government.

“[As a result,] the number of Chinese tourists to Japan who buys tax-free goods in volume for the purpose of reselling them [in China] is decreasing,” said a source who is well versed in department store issues.

Compared with exchange rates during the 2018 Lunar New Year holidays in China, the yen has gained 3.5 per cent against the Chinese yuan in the most recent rates, which has put a crimp in Chinese tourists’ spending.

Chinese tourists go through tax exemption procedures at a counter in the Shinjuku store of Odakyu Department Store Co in Tokyo. – THE JAPAN NEWS/ANN