TT-560 -- Asian Tourists Mean Cash, ebiz news from Japan

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A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, April 04, 2010 Issue No. 560


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In January the Japan National Tourism Organization (JNTO)
announced that the number of foreign tourists traveling to
Japan plummeted 18.7% from 2008 to just 6.79m people in
2009. This was the largest decrease in tourists since 1986
when the yen suddenly appreciated by almost 100%.
Needless to say, the tourists stayed away at that time
simply because everything became so darned expensive.

This time around the tourists are staying away because of
the global financial meltdown and it wasn't just Japan
that was affected. Pretty much every tourist destination
saw similar double-digit drops. However, whatever the
reason, the fact is that the government is extremely
unlikely to hit its 10m visitors by 2010 target this year,
and indeed a bad economy is not the only reason. There needs
to be an awakening both at government level and commercially
that tourism is a potentially massive industry for Japan and
that investment is needed to help things along.

What was interesting during the recent downturn was that
even as overall numbers fell, the number of visitors from
China actually increased to about 1m people. This is no
doubt partly because the visa rules were changed to make
it easier for Chinese tourists to travel in Japan outside
of groups. But perhaps the bigger reason has been the
increasing wealth effect being experienced by China's
coastal entrepreneurs and professionals. Given that China's
economy is still booming, we can expect this trend to
remain for quite some time. The propensity of Asian
tourists in general to shop, eat, and pay for good
service underlines their emerging importance to our

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[...Article continues]

There are four major groupings of tourists visiting Japan:
i) English-speaking westerners who come from North America,
Europe, or Oceania. These people number around 3m
annually. ii) Next are South Koreans, numbering 1.58m, then
iii) Taiwanese numbering 1.02m, and iv) Mainland Chinese
numbering around 1m. Of these, almost all our Asian
neighbors are sending tourists as tour groups, and any
money that they spend in Japan is dropped across the travel
network set up by each of the tour operators.

One group that is outside the "Big Four" but which possibly
points the way to the future is that of Hong Kong Chinese
who travel individually (FIT travelers) rather than in
groups. These people were highlighted in an interesting
report put out by Japan Tourism Marketing Company last
year. In that report, the consultant suggested that repeat
visitors are an emerging trend that needs to be paid
attention to, and that the most prevalent repeat travelers
are from Hong Kong and Taiwan.

In 2008, apparently 79% of visitors from Hong Kong were on
repeat visits and 85.5% of those people were traveling for
leisure rather than business. The number of repeat visitors
from Taiwan was 72.1% and 73.6% of them were tourists.
Repeat visitors are important to any country because these
people need little or no marketing effort to encourage them
to come back, and they tend to be enthusiastic about their
preferred destinations and thus very good at promoting
Japan by word of mouth. These types of repeat tourists were
by no coincidence who the Japan Tourism Agency (JTA) was
trying to target in their web-based Visit Japan campaign
last year.

It also helps that the HK visitors spend a significant
amount of money each time they come over. According to the
JTM report, the average HK tourist spends JPY143,000 per
person, making them the biggest spenders of the four major
source markets. We're sure that the Japanese government is
trying to figure out how to get other tourists to spend an
equal amount.

For if they were able to do so, and if tourism this year
slightly recovers to 7m people, which we expect it will,
then the annual net income to the country would be just
over JPY1trn. Of course if they could get the numbers up
to the oft-stated target of 10m, then add another JPY300bn
to that total income. To put this in perspective, at that
level the tourism industry would be worth about half the
entire domestic auto industry (in terms of new car sales)
-- and just think about how much attention and resources
go into that industry. Certainly the numbers might help
wake the Japanese government up that it needs to devote
billions of yen, not mere millions, to the promotion of the
country as a tourist destination. This is not the fault of
the JTA but of the politicians who would rather have bed
ridden votes than tourists.

While we all wait for the government to get it, that
tourism can make a huge difference to this ailing economy
without needing the significant infrastructure that heavy
manufacturing does (in fact, tourists like to stay in old
"traditional" facilities), many private companies are
already waking up to the fact that Asian wealthy tourists
are worth looking after. And if they start becoming
repeaters, then those tourists wil present many new and
interesting opportunities to the entrepreneurs amongst us.

The Nikkei covered one such business that has had the
tourism epiphany, when it wrote recently about an Izekaya
chain called Colowide. This company offers Hokkaido-style
drinks and food at more than 40 chain stores all over the
country. Last year the company decided to counter its
falling sales to Japanese patrons by targeting foreign
guests. The company required all its stores to provide
menus in English and will shortly have the same menus in
Chinese and Korean as well. Although this seems like an
obvious thing to do, believe us when we say that getting
traditional Izekaya to switch to foreign customers is a
ground shift in attitude.

Indeed, we have been speaking to an Izekaya chain here in
Tokyo about doing the same thing, and despite their stores
falling on hard times, they're still arguing about whether
the foreigners will scare their other patrons away or cause
undue language problems with the shop masters...

Meanwhile, Colowide has made a total commitment to its new
market and is apparently now negotiating with Korean and
Chinese tour agencies to provide group nights out at its
larger stores. We suppose that hosting upwards of 100
foreign guests at a time is sufficient temptation to break
down whatever reluctance they may have originally had in
serving non-Japanese. And that's a good thing!

Looking at the other end of the country, we see
opportunities for Fukuoka, the leading tourist destination
in Kyushu. This lively city is just 100 minutes flight
time away from Shanghai (and 80 minutes from Seoul) and it
is already a popular destination for tourists from these
neighboring countries. Kyushu's laid back atmosphere,
coupled with great shopping, clean air, copious
accommodation (thanks to the 1990's bubble), and reasonable
prices means that Kyushu is a world away -- an ideal
escape in fact -- for Chinese and Korean families looking
for some R&R in a safe location.

Therefore, one business that we can see arising over the
next 5 years is that of real estate. Just as we have seen
hundreds of Australians and now Asians buying skiing
properties at high prices up in Nisseko, Hokkaido, we can
imagine that Chinese and Korean families owning timeshares
in downtown Fukuoka or out in nearby onsen areas such as
Beppu, Yufuin, and Kurokawa. Such timeshares would
create all sorts of employment and supply opportunities to
the local economy. Sure, language and attitudes towards
foreigners will have to be addressed, just as they were in
Nisseko (the foreigners built their own hotels and
restaurants and the local Japanese followed suit) but
as any early-stage tourist resort found out in a new
destination, the answer is to provide on-the-ground bilingual
staff and shopping to help iron the wrinkles out of being in
a foreign country. There are plenty of Japanese-speaking
Chinese living in Japan and thus this is not an
insurmountable obstacle.

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+++ NEWS

- Livedoor finally sold
- UN rights expert comments on immigration
- METI to launch JPY10bn fund for multimedia
- Wolf to guard the tuna hen house?
- Drugs and medical equipment imports hit record

-> Livedoor finally sold

It seems that LDH (Livedoor Holdings) has managed to sell
off its final major asset, being the Livedoor internet
portal, for around JPY7bn (US74m). Livedoor attracts about
30m users a month mainly thanks to its ever popular
blogging service. The buyer will be NHN Corp., South
Korea's largest web portal and search business. (Source: TT
commentary from, Apr 2, 2010)

-> UN rights expert comments on immigration

A UN appointed Special Rapporteur, Mr. Jorge Bustamante,
has made some initial comments prior to his upcoming
complete report to the Geneva-based UN Human Rights Council
later this year. Bustamante said that immigrants to Japan
face racism, discrimination, exploitation, and unequal
treatment by the judiciary and police. This was a strongly
worded statement that while acknowledging some positives,
mostly faulted Japan for not implementing a comprehensive
immigration policy that protects human rights. While the
official position of the Japanese government seems to be
that special legislation is not required because there is
little trouble reported by immigrants, Bustamante has
noted else wise, saying that Japan's laws are not effective
in preventing racial and nationality discrimination.
Bustamante has just wrapped up a visit to Japan where he
heard from many human rights groups about the plight of
immigrants here. (Source: TT commentary from, Apr 4, 2010)

-> METI to launch JPY10bn fund for multimedia

According to a Nikkei report quoted by, the
Innovation Network Corporation of Japan (INCJ), a
government-owned investment fund run by the Ministry of
Economy, Trade, and Industry (METI), has started investing
the first monies from its JPY10bn fund into domestic
multimedia companies looking to go international. The INCJ
is supporting the production and sales of movies, anime,
and music abroad. The INCJ apparently wants to increase
Japan's current multimedia exports from JPY1trn in 2008 to
JPY2.5trn by 2020. (Source: TT commentary from, Apr 3, 2010)

-> Wolf to guard the tuna hen house?

We're not sure why the government even feels the need to do
it after its recent CITES victory to continue exports of
Bluefin Tuna to Japan, but in any case it has said that it
will take steps to reign in tuna poaching and overfishing.
One of these steps will be the requirement for all tuna
species sold in Japan to carry import certificates stating
the source of the product. Further, the government plans to
start policing fishing firms harvesting tuna, so as to
reduce illegal fishing. ***Ed: Why do we feel like these
measures are mere lip service?** (Source: TT commentary
from, Apr 4, 2010)

-> Drugs and medical equipment imports hit record

The Ministry of Health has issued data showing that the
import of drugs and medical equipment into Japan hit a
record level of JPY2.95trn, about 8% more than 2007. This
means that Japan is running a trade deficit on medicines
and equipment of around JPY2.23trn. Not a small amount.
The Nikkei says that cancer treatments, anti-virus drugs,
pacemakers, and consumables such as syringes are the most
common imports. (Source: TT commentary from,
Apr 3, 2010)

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.


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