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Rich Chinese Travelers Flock to Tokyo, Taking Advantage of Weak Yen
Luxury brands in Japan are witnessing a significant boost in sales, primarily driven by Chinese travelers capitalizing on the weak yen, as indicated by recent earnings reports.
LVMH, Kering, and Burberry have all noted this surge, which contrasts with weaker sales in China, adversely affecting overall results. For instance, Kering-owned Yves Saint Laurent saw a 42% increase in Japan for the first half of the year, thanks to the influx of Chinese and Southeast Asian tourists drawn by favorable exchange rates.
LVMH also reported “exceptional growth in Japan” during the first half of the year, largely due to Chinese travelers. The Chinese yuan has appreciated 6.9% against the yen this year, reaching its strongest level against the Japanese currency in over two decades.
Visitor Surge in Japan:
South Korea accounted for the most visitors to Japan in the first half of the year.
Chinese visitors saw a dramatic increase of 415%, reaching 3.1 million.
Trip.com has reported a recent rise in spending by Chinese travelers to Japan, showing over 60% growth in bookings and global shopping services involving luxury brands.
Chinese social media platforms, including Weibo and Xiao Hong Shu, are abuzz with tips on luxury shopping in Japan. Users praise shopping locations in cities like Sapporo, highlighting significant price advantages.
Affluent Chinese Shoppers:
A study by Oliver Wyman revealed that Japanese prices for luxury goods are 10-30% lower than in mainland China.
The survey noted a rising interest in Japan among affluent Chinese households.
Despite a decline in overall Chinese luxury spending due to income uncertainty, interest in Japan remains strong. About 20-25% of Chinese luxury spending now takes place abroad, compared to about 50% pre-pandemic.
Top Luxury Shopping Destinations:
Hong Kong remains the most popular for Chinese shoppers, followed by Macao, Singapore, and Japan.
Burberry reported a 6% sales increase in Japan, contrasting with a 21% drop in mainland China sales.
Market Dynamics:
Coach owner Tapestry saw a 2% rise in Japan sales while experiencing a 2% drop in Greater China sales for the quarter ending March 30.
Burberry issued a profit warning and suspended its dividend due to a global sales decline, despite Japanese growth.
Conclusion
Chinese travelers are flocking to Japan, leveraging the weak yen to enjoy significant savings on luxury goods. This trend has provided a much-needed boost to luxury brands in Japan, despite ongoing economic challenges in China. The evolving dynamics highlight the resilience and adaptability of the luxury market in response to currency fluctuations and travel trends.
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