Japan has been warned that it will be difficult to fill the gap in retail and tourism revenue if Chinese tourists continue to cancel tours due to diplomatic tensions, according to BMI.
A November 21 report by BMI, a subsidiary of data provider Fitch Solutions, warned that a prolonged decline in Chinese tourist flows would have a significant impact on the Japanese economy. This is the largest source of international visitors and has a higher spending level than average in the land of the rising sun.
In the short term, the Japanese tourism industry “does not have many alternatives” and “it will be very difficult to fill the gap left by Chinese tourists”, BMI said, saying “duty-free shops at airports and large shopping centers will be directly affected”.
Chinese tourists take souvenir photos during their trip to Japan, with Mount Fuji in the background. Image: AFP
Tensions between China and Japan have escalated since early November, after Japanese Prime Minister Sanae Takaichi suggested that Tokyo could deploy military forces if there was a conflict in the Taiwan Strait.
Since then, Beijing has repeatedly issued travel warnings, urging citizens to avoid traveling to Japan, while some Chinese airlines have allowed full refunds for trips to Japan until the end of the year. Chinese airlines recorded 491,000 ticket cancellations to Japan in just 3 days. If the number of Chinese visitors falls sharply, the Japanese economy could lose about 1.49 trillion yen (9.6 billion USD) next year, according to estimates by experts at the Nomura Research Institute in Tokyo.
According to BMI, in the third quarter, Chinese tourists in Japan spent an average of 1,622 USD/person, higher than the 1,488 USD/person of international visitors in general.
In the medium and long term, Japan can partly offset the decline in visitors from China thanks to “gradually increasing demand” from the US, Australia, Korea, Taiwan and Southeast Asian markets. However, BMI still affirms that “it is unlikely that the high-value retail industry, which depends on Chinese customers, will fully recover”.
However, according to local hotel operators, “it is still too early to assess the impact on airlines, tour booking companies and accommodation facilities”.
Mayur Patel, Asia director of analyst firm OAG Aviation, said that it may take airlines a few weeks to adjust seat numbers to compensate for reduced bookings on China-Japan routes. He predicts that by Christmas, Japan will offset most of the temporary losses thanks to increased bookings from other countries and also from Chinese tourists not affected by political tensions.
The decrease in Chinese tourists to Japan creates conditions for other countries in the region to attract tourists. Subramania Bhatt, CEO of travel marketing and technology firm China Trading Desk, said the number of searches for trips to Singapore by Chinese tourists increased about 15% as of November 18 compared to the previous week.
Bhatt said Singapore is highly rated for family travel in China due to its close location, safety and widespread use of Chinese. Trips to Korea and combined tours of Malaysia – Singapore – Thailand are also very popular with Chinese tourists.