Bloomberg News

Japan Sees a 20% Drop in China Tourists as Islands Spat Heats Up

September 13, 2012

Japan Fears 20% Drop in China Tourism on Island Dispute Boycott

Chinese people protesting against Japan's "nationalizing" of the Diaoyu islands, known as the Senkaku Islands in Japan, outside the Japanese embassy in Beijing. Source:AFP/Getty Images

Chinese visitor numbers to Japan may decline as much as 20 percent because of a dispute over uninhabited islands in the East China Sea, according to the Japan National Tourism Organization.

“We are very worried,” Mamoru Kobori, the tourism agency’s overseas marketing manager, said by phone yesterday. “There will surely be an impact on the numbers and the only question is how much -- 10 percent or 20 percent is possible.”

A slump in demand from its second-biggest overseas market would add to the difficulties facing Japan’s tourism industry as it tries to recovery from last year’s tsunami and nuclear-power crisis. Ctrip.com International Ltd. (CTRP:US), owner of China’s biggest travel portal, has halted Japan promotions ahead of a weeklong Chinese holiday starting Oct. 1, while travel agents are canceling trips.

“We want to express our anger toward the Japanese government, even though we have to sacrifice some commercial interest,” said Stephanie Liu, marketing manager at China Comfort Travel Group Co.’s Sichuan province unit. “Almost all of our customers understand the situation.”

China Comfort, which operates more than 5,000 travel agents nationwide, has canceled all of its Japan trips and is refunding customers. Shanghai Spring International Travel Service Co., parent of China’s biggest low-cost carrier, has seen a 40 percent drop in Japan bookings, according to Zhang Wu’an, a spokesman for the airline unit. New York-listed Ctrip said it has stopped advertising Japan holidays in newspapers, by e-mail and on its home page.

Chinese visitor numbers to Japan declined 16 percent from a year earlier in the weeks after a collision between a Chinese fishing vessel and a Japanese coastguard ship in 2010, according to the tourism agency’s Kobori.

Patrol Vessels

The dispute over the islands, known as Senkaku in Japanese and Diaoyu in Chinese, has escalated this week after the Japanese government moved to nationalize them. China has sent two patrol vessels to the area while hundreds of people protested outside Japan’s embassy in Beijing yesterday, according to state-run Xinhua News Agency.

China Vice Minister of Commerce Jiang Zengwei said yesterday Japan’s purchase of the islands will negatively affect trade between the two countries.

“If Chinese consumers express their views in a rational way, I think this is their right,” Jiang said according to a ministry transcript. “We hope Japan can treat Sino-Japanese relations in a proper way and create a good environment for bilateral trade.”

Nissan Motor Co. has pared marketing events in China because of violent anti-Japanese demonstrations prompted by the islands dispute, Chief Operating Officer Toshiyuki Shiga said Sept. 6. Chief Executive Officer Carlos Ghosn said in an interview yesterday there hasn’t been a significant impact on the Japanese carmaker’s sales.

China-Japan Tourism

Mainland Chinese visits to Japan surged 72 percent through July from a year earlier to 947,600, trailing only South Korea, according to the Japan tourism board’s data. That compares with 868,924 in January to July 2010.

Japan’s total visitor numbers have risen 44 percent this year to 4.9 million. Visits plunged 28 percent last year after the March earthquake and tsunami crippled a nuclear-power plant prompting fears about radiation leaks and causing power shortages that are still continuing. The country got 5.1 million visitors in the first seven months of 2010.

Rising Wealth

Chinese visits to Japan have jumped because of rising wealth and because Japan cut prices and eased visa requirements after the earthquake last year, said Wang Langqi, a Beijing- based analyst with Founder Securities Co.

“If the tension quickly cools down, demand should rebounded soon,” he said. “Of course, it could develop into a serious issue if the dispute escalates further.”

The government hasn’t issued official advice against travel to Japan, said Paul Zhang, manager of the Japan travel division at Shanghai Jinjiang International Travel Co. (900929), which hasn’t canceled any trips. The company has received calls from customers asking whether their itineraries will be changed.

“They are worried if they will still be welcome in Japan and if it’s safe to travel,” he said. Most Chinese holidaymakers go overseas in organized tour groups.

Takafumi Otsubo, president of Tourism Culture Labo, which advises Japanese travel companies, said he had heard of a number of hotels and inns that had had cancellations from Chinese tourists.

“It’s a shame that tourism is often used as a political tool,” he said. “So many people in China and Japan who work in the industry are suffering.”

Japan Travelers

Companies organizing trips for Japanese tourists have so far seen little impact on bookings to China, the most popular overseas holiday destination in the first seven months of the year. The number of trips rose 10 percent to 2.2 million in the period, according to data compiled by Japan Tourism Marketing Co. Second-ranked Korea posted a 27 percent jump to 2.1 million.

JTB Corp., Japan’s biggest travel agency, didn’t see any drop in business to China through August because of the islands dispute, said Motohisa Tachikawa, a spokesman. Japan Airlines Co. has had only “a small number of cancelations,” said Morito Takeda, a spokesman. The carrier is watching booking levels, he said. H.I.S. Co. (9603), the largest listed travel agency, said there had been some impact starting late in August.

“Some new customers changed the travel plans or postponed trips until September or October,” said Manabu Shimizu, the head of the Tokyo-based company’s corporate planning division. “We really hope the dispute doesn’t get any bigger.”

To contact the reporters on this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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