Japan's tourism industry says hello to Chinese investment
Mainland companies used to strike deals with hotels and bus companies, but amid a flood of visitors, they now prefer takeovers.
One deal by a Chinese company in Japan has snowballed into an avalanche of interest.
The phone of Beijing-based investment consultant Takahiro Shirono has been ringing off the hook since Shanghai-based Yuyuan Tourist Mart announced it was splashing out 18.3 billion yen (HK$1.2 billion) to buy the remaining stake of a major ski resort in Hokkaido in November.
“Chinese investors were curious about what attracted a big Chinese company to make such a huge investment in Japan,” China Strategy Group chief executive Shirono said.
Yuyuan’s purchase of the resort, with its 757 rooms, 25 ski trails and 18-hole golf course, is just one mainland company’s attempt to tap into demand from the surging numbers of Chinese visitors.
Two weeks earlier, Spring Group, the parent company of Shanghai-based Spring Airlines, said it was teaming up with a local partner to launch a new hotel brand in Japan. Its plans are to spend more than 20 billion yen to build up to 20 hotels in Japan’s major tourism hot spots.
Then late last month Shanghai-based real estate company Greenland Group said it would join forces with Laox, Japan’s biggest duty-free chain, in a US$60 million deal to buy a Chiba-based commercial complex, a move Greenland said would help meet demand for shopping and accommodation from Chinese tourists.
The number of Chinese holidaymakers to Japan doubled last year to account for more than a quarter of Japan’s 19.7 million tourists in 2015, according to the Japan National Tourism Organisation.
Chinese tourists spent over 1.4 trillion yen, or 41 per cent of the total, buying everything from toilet seats to cookers and medicines – so much so that the Japanese have a word for it. Bakugai, or “explosive shopping” in Japanese, was chosen was one of the buzzwords of the year by one publishing house.
The flood of visitors has not just been a bright spot for Japan’s sluggish economy, but also forged new investment ties in tourism-related industries between the two major trade partners.
Shirono said many Chinese investors had shown particular interest in putting their money into hotels and tour bus companies in popular Japanese destinations.
“Chinese tourism companies used to cooperate with these hotels and bus companies, but as the number of Chinese tourists is rising so fast, they want to cut costs and a takeover is a cost-efficient choice in the long term,” he said.
Traditional destinations such as Tokyo and Kyoto hold strong appeal but the limited land supply and higher costs of those cities means more investors are now turning their eyes to other areas like Hokkaido, according to Shirono.
However, compared with Japan’s investment in China, which started as early as 1980 and ranges from manufacturing to retailing, China’s investment in Japan is still small. China’s non-financial investment in Japan was US$98.33 million in the first half of last year, while Japan’s investment in China amounted to US$2.01 billion.
Yoshihisa Tabata, director general of the Beijing office of the government-backed Japan External Trade Organisation, said Chinese investment in Japanese tourism was growing in a “virtuous circle”. Thanks to easier visa requirements, a weaker yen and an increasingly affluent middle class, Chinese tourists could generate not just revenue but also investment, he said.
This dovetails with the Japanese government’s goal to boosting spending by foreign tourists to help lift GDP to 600 trillion yen by 2020. The country aims to attract 30 million visitors this year.
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