Chinese tourists are fueling a surge in luxury goods sales in Japan, capitalizing on the weakened yen, which has plummeted to its lowest level in decades this year.
Major luxury brands, including Yves Saint Laurent, Louis Vuitton, and Burberry, have reported significant sales growth in Japan during the first six months, despite experiencing weaker results in other markets.
French fashion house Yves Saint Laurent’s sales jumped 42% in Japan “due to strong growth in the number of tourists visiting from China and Southeast Asia, who were attracted by the pricing differential arising from the favorable exchange rate,” its parent company Kering said recently.
Another French brand, Louis Vuitton, operated by conglomerate LVMH, saw “exceptional growth in Japan arising in particular from purchases made by Chinese travelers.
British brand Burberry has seen slower sales in China, its biggest market. But Japan posted a 6% growth, thanks to a surge in tourists’ spending, especially those from China, it said in a financial report last month.
“Globally, the Chinese customer group also declined but held up better than mainland China as spend was diverted offshore,” it said.
“Japan continued to grow, benefiting from strong tourism spend mainly from Chinese and near shore customers in Asia, whilst locals remained soft,” it added.
The number of Chinese tourists in Japan quadrupled year-on-year in the first six months to 3.1 million, according to the Japan National Tourism Organization.
The Japanese yen has been the one of the most depreciated currencies in the world this year and is hovering around the lowest in nearly four decades against the U.S. dollar.
The Chinese yuan has risen 6.9% against the yen so far this year. Last month it reached a 24-year high against the Japanese currency.
This currency disparity created opportunities for Chinese nationals like Snow and her boyfriend, who spent their first Japan visit indulging in luxury purchases.
At a Gucci shop in Tokyo, the 30-year-old spent US$3,390 on a bag and two accessories.
Another tourist who visited Japan in June said: “With the effect of the weak yen, shopping is quite affordable.”
“You could buy a Bulgari necklace that costs 368,000 yen in mainland China for 300,000 yen in Japan.”
Interest among affluent Chinese households in visiting Japan increased by 5 percentage points in May compared to a survey conducted last September, according to a study by consulting firm Oliver Wyman.
Their travels are motivated by affordability. Prices for a range of luxury products in Japan were 10% to 30% lower than in mainland China, it added.
Foreigners visiting Japan spent JPY2.14 trillion in the second quarter, a new quarterly record, according to the Japan Tourism Agency. Apart from mainland China, other major inbound tourism markets included South Korea, Taiwan and the U.S.
Large department stores have also reaped the benefits of the luxury shopping boom. Isetan Mitsukoshi Holdings’ three flagship stores in Tokyo experienced a 20% year-over-year sales increase in the first half of July.
Daimaru Matsuzakaya Department Stores’s tax-exempt sales jumped nearly 22% during the same period.
