Chuo Ward, Tokyo, Japan – February 23, 2018. Top luxury shopping streets with colorful neon signs. Ginza avenues are lined with expensive brand shops and restaurants in the heart of Tokyo. It’s half past five on a Friday afternoon. People flock to Ginza for shopping, dining and drinking with their friends. Ginza has become synonymous with Japan’s major shopping districts.
Marco Ferrari | Moment | Getty Images
SHANGHAI — Luxury brands are seeing a rise in sales in Japan, largely due to purchases by Chinese travelers taking advantage of the weak yen, according to earnings results this month.
LVMH, Kering and Burberry all posted gains, despite weaker sales in China weighing on overall results.
Sales in Japan for Kering-owned Yves Saint Laurent rose 42% in the first half of the year “due to strong growth in the number of tourists visiting from China and Southeast Asia, who were attracted by the price differential resulting from the favorable exchange rate equivalent”. the parent company announced Wednesday about its second largest brand.
For the first half of the year, luxury group LVMH this week it was reported “excellent growth in Japan arising in particular from purchases made by Chinese travellers’.
The Chinese yuan has gained 6.9% against the yen so far this year, after this month hitting its strongest level against the Japanese currency in at least 24 years, according to data from Wind Information since 2000.
The yen has fallen to 38-year lows against the US dollar as the interest rate differential between the Federal Reserve and the Bank of Japan remains wide.
Global visitors to Japan rose in the first half of the year, with South Korea accounting for the most travelers, according to Japan National Tourism Organization.
However, visitors from mainland China rose sharply, rising 415 percent in the first half of the year to 3.1 million visitors, the data showed.
Trip.com told CNBC that it has seen an increase in spending by Chinese travelers heading to Japan in recent months compared to the previous three months. The travel service reported more than 60% growth in both bookings made through its custom travel team and its global shopping service, which works with luxury brands worldwide. Trip did not specify which months, citing upcoming earnings that have historically been released in September.
On Chinese social networking sites such as Weibo and Xiao Hong Shu, users are sharing tips about it where to shop luxury in japan.
A netizen urged his colleagues to save money — with shopping in Japan. He praised a mall in Sapporo for being the “top” model for shopping with a “beautiful” Gucci store.
Another post seen by CNBC saw the creator saying that they “shopped until their feet were jelly.”
Interest among affluent Chinese households in visiting Japan rose 5 percentage points in May compared with a survey done last year in September, according to a study by consultancy Oliver Wyman. The income section covers families in mainland China earning at least 30,000 yuan a month ($4,140 or about $50,000 a year).
Oliver Wyman’s research found that on a variety of luxury goods, prices in Japan were 10% to 30% cheaper than in mainland China.
This was a steeper discount compared to Hong Kong. For example, a Louis Vuitton Speedy Bandouliere 20 sold for 16,700 yuan in mainland China at the time of Oliver Wyman’s study, a 3% discount in Hong Kong — and a 19% cheaper price in Japan.
Malaysia offered a 10 percent discount and France a 27 percent discount, the report said.
It quoted an unnamed manager of a luxury brand retailer as saying that “In Asia, Japan has the most comprehensive product range (eg style, color, etc.) other than Hong Kong, across most luxury brands.”
Slower growth in China
Chinese buyers’ interest in Japan is coming as a whole Chinese luxury spending has fallen amid uncertainty about future income. Locals also increasingly prefer to take cheaper holidays in mainland China.
About half of Chinese luxury spending was overseas before the pandemic, but that has now halved to about 20% to 25%, according to Oliver Wyman.
Japan was the fourth most popular destination for overseas luxury purchases, although Hong Kong remained by far the most popular site, followed by Macau and Singapore, according to the report, as of May.
“Globally, the Chinese customer base also declined but held up better than mainland China as spending was diverted offshore,” Burberry said in its earnings release earlier this month. “Japan continued to grow, benefiting from strong tourist spending mainly by Chinese and near-Asian customers, while locals remained soft.”
Burberry’s sales in mainland China fell 21% in the latest quarter from a year earlier, while those in Japan rose 6%. An overall slump in global sales prompted the luxury brand to issue a profit warning and suspend its dividend, as well as replace its CEO.
In the quarter ended March 30, coach owner Tapestry saw sales in Greater China, which includes mainland China, Hong Kong, Macau and Taiwan, fall 2 percent. But sales in Japan rose 2% during that period. The company has yet to schedule its next earnings release.
— CNBC’s Sonia Heng contributed reporting from Singapore.
