Rising Number of Chinese Tourists to Japan
Photo Credit: AP
By Min-Hua Chiang

Rising Number of Chinese Tourists to Japan

Jun. 25, 2018  |     |  0 comments


Japan has become an important outbound tourism destination in recent years. Foreign visitors to Japan have gradually increased over the last two decades except for a dip during the Asian financial crisis in 1998, the global financial crisis in 2009, and the Great East Japan Earthquake in 2011. Visitors to Japan have increased particularly quickly since 2012, with an annual growth rate of 22-47 percent during the 2012-16 period. The number of foreign visitors to Japan reached a record high of over 28.7 million in 2017, from 8.3 million in 2007.


China has been a major contributor to Japan’s quick growth of inbound visitor arrivals in recent years. The share of Chinese visitors in Japan has started to exceed that of ASEAN-6 (Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand) since 2002, Europe and US since 2008, and South Korea and Taiwan since 2015. In 2017, China accounted for 26 percent of total foreign visitor arrivals in Japan, totalling nearly 7.5 million people, outstripping South Korea (25 percent), Taiwan (16 percent) and ASEAN-6 (10 percent) according to the statistics from Japan National Tourism Organization.


Reasons for Quick Growth of Chinese Tourists


Several reasons are attributable to the quick development of Chinese tourists to Japan in recent years. The first reason is the deregulation of China’s outbound tourism rules. The growth of Chinese visitors to Japan was slow before the 1990s because of the bar to outbound tourism for private purposes until 1995. Japan also imposed severe restrictions on Chinese citizens going to Japan out of fear of illegal immigration. Since 2000, residents in Beijing, Shanghai and Guangzhou have been allowed to travel to Japan, followed by residents in Liaoning, Tianjin, Shandong and Jiangsu since 2004. From 2006, all Chinese citizens have been permitted to visit Japan.


Second, to respond to the increasing demands for Chinese independent travelers, Japan has also relaxed requirements for three-year, multi-entry visas and made available five-year, multiple-entry visas for high-income groups in China since 2015. From October 17, 2016, Japan has further relaxed visa rules to encourage repeat arrivals from China.


Third, in view of Chinese tourists’ huge consumption potential, the Japan Tourism Agency signed a memorandum of understanding (MOU) with China UnionPay as early as in 2010 to facilitate Chinese travelers’ shopping in Japan. The items for tax-free shopping have enlarged since October 2014. From April 2015, more locations are allowed for shoppers to apply for tax refunds. With the policy encouragement, Japan has become an important shopping destination for Chinese tourists. In 2015, Japan ranked first among the top five shopping destinations for Chinese visitors, followed by the US, France, Australia, and the UK.


At the same time, political issues continued to trouble the two countries. In 2005, anti-Japanese riots broke out in several Chinese cities following Japanese Prime Minister Koizumi’s visit to the Yasukuni Shrine. Despite the estranged bilateral relations, Chinese visitors to Japan continued to grow in 2006 and 2007. However, in 2010, Sino-Japanese tensions rose when the Japanese Coast Guard arrested a Chinese captain after a Japanese boat collided with a Chinese trawler. China requested local travel agencies to halt tourism advertisements on Japan. Subsequently, Chinese visitors to Japan dropped from 1.41 million in 2010 to 1.04 million in 2011 (Figure 1).


Figure 1. Foreign Visitor Arrivals in Japan by Selected Country/Region 1997-2017


Source: Japan National Tourism Organisation.


The Japanese government’s purchase of five islands in the disputed Senkaku chain in 2012 brought another round of quarrels between the two countries. Chinese visitors to Japan dropped again from 1.43 million in 2012 to 1.31 million in 2013. Chinese tourists in Japan’s total tourist arrival also declined from 17 percent in 2012 to 13 percent in 2013. The drop of Chinese tourists to Japan proved to be temporary. Chinese tourists to Japan surged sharply to 2.4 million in 2014 despite the deteriorating bilateral relations. Chinese visitors to Japan further increased to 4.9 million in 2015, 6.5 million in 2016 and 7.3 million in 2017.

 

In terms of inbound tourism consumption, China contributed 1,475.4 billion yen in 2016, accounting for 39 percent of Japan’s total inbound tourism, followed by Taiwan (14 percent), South Korea (11 percent), ASEAN-6 (9 percent), Hong Kong (8 percent) and the USA (6 percent) (Figure 2). The increase in Chinese tourists in recent years showed that economic factors, such as cheaper Japanese yen, increasing number of flights and cruise ships, and the rise of the Chinese middle class have prevailed over the political quarrels.


Figure 2. Japan’s Inbound Tourism Consumption by Major Countries In 2017


Source: Japan Tourism Agency (2016). White Paper on Tourism in Japan: The tourism situation in FY 2016.


Profile of Chinese Tourists to Japan


The Chinese tourists to Japan are mostly young middle class living in big cities. According to the Japan Tourism Agency’s survey, nearly half of Chinese visitors to Japan came from Shanghai (22 percent), Beijing (16 percent) and Guangdong (10 percent) in 2015. Among Chinese visitors, female visitors (55 percent) surpassed male visitors (45 percent) by 10 percent. Japan is also favored by young people aged between 20 and 39. The JTA survey also showed that 57 percent of Chinese tourists to Japan are independent travelers compared to 43 percent with group tours. This is in line with another Chinese survey which showed that most Chinese female tourists favor Japan as an itinerary. So are most independent Chinese travelers.


Like in other tourism destinations, the Chinese tourists spent mostly in shopping. Japan tourism agency’s survey in 2017 showed that 48 percent of Chinese tourist spending was in shopping, followed by 26 percent in accommodation, 14 percent in restaurant and food, 7 percent in transport and 5 percent in amusement services (Figure 3). Compared with tourists from other countries, Chinese tourists’ shopping expenditure per person is the highest (119,239 yen), followed by Vietnam (76,502 yen), Russia (61,820 yen) and Hong Kong (52,128 yen). Chinese shoppers are particularly satisfied with consumer electronic products and cosmetic goods purchased in Japan. They rated good quality (32 percent), reasonable pricing (15 percent) and “made in Japan” (15 percent) as the three main reasons for their satisfaction according to the JTA’s survey.


Figure 3. Breakdown of Chinese Visitors’ Expenditure in Japan in 2017


Source: Consumption Trend Survey for Foreigners Visiting Japan 2017, Japan Tourism Agency.


Japan was ranked the most memorable travel destination in 2015 for young Chinese travelers (24 percent), followed by France (10 percent) and Korea (8 percent). Many Chinese travelers considered Japan as the “must visit country” in their lifetime according to the survey. Some 63 percent of Chinese visitors visited Japan for the first time, with the remaining 37 percent more than two times. 90 percent of Chinese tourists are ready to visit Japan again. With China’s huge population and Chinese tourists’ strong intention to revisit the country, China is very likely to remain an important source of inbound tourism market for Japan in the years to come.


China’s Role in Japan’s Effort towards a Tourism Nation


Tourism has gained much emphasis in the last two decades in Japan. “Welcome Plan 21” or the “Plan to double the number of incoming visitors to Japan” was initiated in 1997. The initial objective was to foster the long-standing friendship between Japan and other countries as well as to ameliorate Japan’s long-term trade deficit in travel services. In 2003, Prime Minister Koizumi announced in a policy speech the government’s aim to build Japan into a “Tourism Nation”. In 2006, the Tourism Nation Promotion Basic Law was passed. Based on the Basic Law, Japan Tourism Agency was established in 2007 to promote Japanese tourism overseas. As part of his “Abenomics” policy, Prime Minister Shinzo Abe in 2014 set a goal of doubling the annual number of foreign tourists to 20 million in 2020. Following the quick growth of foreign visitors, the government in 2016 upped its target to 40 million visitors in 2020 and 60 million in 2030.


In 2015, Japan ranked 9th in the world and 3rd in Asia in terms of the number of international tourist arrivals. With the growing number of foreign tourists, Japan’s inbound tourism receipts had surged from USD 3 billion in 1995 to USD 12 billion in 2005 and further to USD 30.7 billion in 2015, making Japan the fifth largest tourism destination in East Asia, after China, Hong Kong, Macao, and Thailand. Although Japan’s inbound tourist expenditure has increased over the last few years, it still accounted for only a small portion of Japan’s tourism industry. According to the World Travel and Tourism Council (WTTC), domestic tourist spending in Japan constituted 88 percent of total tourism production in 2015 whereas foreign visitors’ spending was only 12 percent. The potential of inbound tourists to Japan is still large as compared with other tourism-oriented countries.


China is likely to remain dominant in Japan’s inbound tourist profile. Although China’s economy has slowed down with an annual growth rate of below 8 percent since 2012, its outbound tourism had continued to register double-digit growth from 2012 to 2015. The relatively small portion of outbound tourists in its total population suggests China’s great potential for contributing to Japan’s inbound tourism. According to the Bank of Japan’s estimates, the large-scale expansion in infrastructure in preparation for the 2020 Olympics Games and inbound tourist consumption is expected to increase Japan’s annual GDP by an average of 0.2 percent to 0.3 percent during the 2015-18 period. Hence, the optimal scenario is that the economic growth rate in 2018 will be 1.2 percent higher than in 2014. Japan’s GDP could go higher if it could meet its target of 40 million visitors in 2020 and 60 million in 2030. The higher GDP following the greater inbound tourism expenditure could be an important political advantage for Abe.


Nonetheless, relying on Chinese tourists could also leave Japan’s tourism industry more vulnerable to the political uncertainties. First of all, it is unclear whether the Chinese visitors have changed their perception about Japan from bad to good after traveling to the country. There is a possibility that those Chinese tourists surveyed have already had good impressions about Japan before leaving for the country. In addition, the current 7.5 million Chinese tourists to Japan only accounts for about 0.6 percent of total Chinese population. As such, even if tourism can help to smooth the bilateral relations, the relatively limited number of Chinese tourists to Japan may limit the positive effect. Furthermore, Chinese people’s good impression about Japan may not necessarily mean that bilateral relations would be improved. The political relations are mostly determined by the governments from both sides. As both China and Japan are competing for the regional leadership position, their geopolitical interests — rather than tourism exchanges — would be more significant in driving their bilateral relations.


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