Boosting Retail Sales Japanese Style

When push comes to shove, we all know that global economic recovery will not take hold until consumers open their wallets -- not their credit accounts -- and start spending like it's 2006. A number of factors will need to align before this takes place in the U.S. But Japan, on the other hand, has figured out how to short circuit the retail spend slump by toying with their visa regulations.

Tomorrow, according to this morning's WSJ, "Japan will significantly relax its visa regulations for Chinese tourists, in a move that will enable another 16 million households -- 10 times the size of the current pool of potential travelers -- to apply for a trip to Japan." This is not a new strategy for Japan but it is dramatically ramped up. The Journal claims that "Up to now, travel visas have been distributed only to wealthy Chinese with relatively high annual incomes; from Thursday, the government will significantly lower its annual income threshold for Chinese tourists, paving the way for "middle class" Chinese to visit Japan."

The Japanese Tourism Agency is quoted declaring that "Chinese visitors each spend about 116,568 yen (about $1,300), compared with 70,000 yen for Taiwan visitors and 25,000 for Americans." In fact, according to the Japan Department Store Association, "Department-store sales have declined for 27 straight months ... [while] a survey of 40 department stores ... found that spending by foreign tourists -- led by Chinese -- has risen every month but one since March 2009." Japan clearly intends to keep the Chinese coming -- even those who aren't wealthy.

It's so very interesting how in this case, historical tensions and presumed xenophobia – which exists in all countries – are trumped by policies that represent significant economic advantage. To wit, the Journal states "Japan, a country not known for its openness to outsiders, has rolled out the red carpet for the Chinese as some of its industries become increasingly dependent on their spending, amid worrisome deflation and a slump in domestic spending." And additionally "China last year displaced the U.S. as the biggest importer of Japan's goods ... [and] Chinese tourists tend to care if products are made in Japan and are more conscious about brands like Panasonic or Sony..." Which may portend that brand respect will precede and even further reduce cultural wariness between these historic rivals.

William Busch

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