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China's outbound group travel ban a blow to Japan's retail, tourism sectors

China's ban on all outbound group travel to stop the spread of a deadly coronavirus has come as a blow to Japan's retail and tourism sectors, which had been looking forward to robust spending by Chinese visitors during the Lunar New Year holidays.
"We may see an impact on our sales as 80 percent of visiting foreign customers at our flagship Hankyu department store in Osaka are Chinese," said an official at operator H2O Retailing Corp, in reference to the group travel ban imposed Monday.
China announced the measure Sunday, a day after the start of the holiday period, in which millions of Chinese usually go overseas.
Sales at department stores in Japan slumped in 2019, falling 1.4 percent from the previous year on a same-store basis for the second straight year, with the drop blamed on bad summer weather and a warm winter.
"If the number of foreign visitors drops, the bustle in cities will certainly fade," said a 50-year-old restaurant operator in Tokyo's Ginza district, a popular shopping area for Chinese tourists.
A 43-year-old woman operating a shoe store in Ginza said, "At this time of year, sales are usually weak. On top of that, I'm wondering whether customers from China will stop coming."
Analysts at Nomura Securities Co estimate that a 10 percent fall in the annual number of foreign visitors would lop 0.1 percent off Japan's gross domestic product.
Hidenori Suezawa, a financial and fiscal analyst at SMBC Nikko Securities Inc, said that on top of the fall in inbound visitors, a spread of the virus in Japan could cause a drop in people going out and the cancelations of events, pushing down consumer spending.
An official at a major hotel chain said the Chinese ban was "disappointing as it came when Japan as a whole was ready to attract customers from overseas ahead of the Tokyo Olympics."
"But we want to respond calmly," the official said.
Other analysts pointed to the potential impact on major Japanese manufacturers due to disruptions in supply chains. Wuhan, the central Chinese city where the virus originated, is home to manufacturing plants belonging to Japanese automakers Nissan Motor Co. and Honda Motor Co., as well as France's Renault SA.
Japanese tourism companies were busy responding to cancellations of tours by Chinese travelers, who have been a major source of revenue for them.
Hato Bus Co, which is known for offering tours around Tokyo, said Chinese tourists, including two from Wuhan, have made cancelations.
The operator will install disinfectant alcohol in all of its buses from Tuesday.
The decrease in Chinese visitors comes as a setback for Japan's goal to attract 40 million visitors from overseas in 2020.
The number of Chinese travelers jumped to 9.59 million in 2019, a 20-fold increase from 2003, buoyed by gradual easing of visa requirements.
At present, Chinese account for 30 percent of the total number of foreign visitors to Japan, and have been the largest group since 2015.
Round-trip flights connecting China and Japan reached 1,400 a week in the current wintertime flight schedule from October to March, up 19 percent from the summertime schedule from April to September.
An official at a private railway operator, whose earnings have been lifted by inbound visitors, said, "It would be severe if China goes as far as banning travel by individuals. We had expected a rise in passengers during the Lunar New Year holidays."
A senior official at the Japan Tourism Agency said, "We still cannot see the extent of implementation of the group travel ban but there is no doubt that customers from China will drop."


© KYODO
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