Japan duty-free sales fall further as China tensions linger

[TOKYO] Duty-free sales at Japan’s top department stores fell again in January. This highlights the prolonged pain for the country’s retail industry, as the tensions between Tokyo and Beijing show no sign of easing.

Takashimaya reported a 19 per cent drop in duty-free sales, citing Beijing’s travel advisory discouraging visits to Japan, though same-store sales rose 7.4 per cent.

J Front Retailing said that tax-free sales at its Daimaru and Matsuzakaya stores declined about 17 per cent, limiting the overall sales growth to 0.7 per cent.

The sales from Chinese tourists plunged about 60 per cent due to their absence in January, weighing on H2O Retailing’s overall sales growth, which came in at 4.2 per cent.

Isetan Mitsukoshi reported that the duty-free sales across its domestic stores fell 15 per cent in December, dragging down its total sales growth to 2.1 per cent.

Matsuya reported a roughly 16 per cent drop at its flagship Ginza store in January, also citing the lack of Chinese customers. They have been the backbone of Japan’s post-Covid recovery, contributing about one-fifth of the 9.6 trillion yen (S$78.8 billion) in tourism revenue in 2025.

But the worsening relations over Japanese Prime Minister Sanae Takaichi’s remarks on Taiwan have exposed the country’s reliance on China as a vulnerability, pushing the country to diversify its demand.

The arrivals from China plunged 45 per cent to 330,000 people in December, even as the overall foreign visitor numbers for 2025 hit a record high – topping 40 million for the first time.

The tourists from other countries helped to offset the decline in Chinese travellers, Japan’s tourism minister Yasushi Kaneko said in January.

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Japan is targeting 60 million inbound visitors and 15 trillion yen in tourism revenue by 2030. The government and the tourism industry are also pushing to diversify visitor sources and revenue streams, to reduce its exposure to Chinese travel demand.

The aim is to lift the spending of each foreign tourist by 9 per cent to 250,000 yen by 2030.

It also seeks to balance tourism growth with local communities’ wishes, while curbing the overtourism that is hurting the residents’ quality of life. BLOOMBERG