TOKYO -- The number of visitors to Japan has begun to rise following the lifting of border restrictions on individual travel imposed to prevent the spread of the coronavirus, surging to about 500,000 people in October, roughly 2.4 times the previous month's figure. Meanwhile the yen has sunk to historic lows, and the government hopes this will spur annual visitor spending to 5 trillion yen (around $36.5 billion) in short order. But what exactly are foreign visitors buying in "cheap Japan"? The Mainichi Shimbun approached tourists on the streets of Tokyo to find out, and examined the effects of the weak yen.
-- Snapping up secondhand games in Akihabara
On a rainy day in mid-November in the capital's Akihabara electronics district, when few people were about, a secondhand store was filled with foreign visitors. Among them was 29-year-old Nordtun Steinar, a high school teacher from Norway.
"My friends wanted me to get them anime stuff and Super Famicom (Super Nintendo)," he said. His large backpack was empty, ready to fill with purchases. "I think I saw a secondhand Super Famicom five years ago in Akihabara. I'm hoping they still have it," he added while browsing the store's wares. He was delighted when he came across used video games priced from 5,000 yen to 6,000 yen (about $37-$44) apiece, and put them into his shopping basket. Among the titles he bought were "Kirby's Dream Land" and "Street Fighter." He also picked up a "Mega Man" game for 1,188 yen (around $8.70). "In Norway this will cost about 20,000 yen!" he said. Adding a stuffed toy for his mother, a fan of the game "Animal Crossings: New Horizons," the total price for his pick-ups came to 17,000 yen (approx. $124). "Now I got everyone a Christmas present," he marveled.
-- Lavish spending around Asakusa
At a shop in the Kappabashi kitchenware district near Asakusa, American visitors, too, were quick to open their wallets. Bonnye Price, 44, bought a knife costing 30,000 yen (around $241) on the spot at the Tsubaya knife shop there. "It's handmade. When you think about its quality, I think it's a great bargain," she said, adding, "My husband loves cooking. It's a present for him."
Price's 47-year-old boss, who was standing next to her, chose four items including a chef's knife without looking at the price, and paid 60,000 yen for them. They were attended by a staff member who could speak fluent English.
Jack Tang, 31, who works at another local knife shop, Washindou, speaks fluent Chinese, English and Japanese. About 70% of the store's customers are from overseas. The manager commented, "It's difficult to employ someone who only speaks Japanese."
In pre-pandemic 2019, the number of visitors to Japan reached almost 32 million, and inbound consumption hit 4.8 trillion yen. But that all vanished when the pandemic hit. The some 500,000 visitors that arrived in Japan in October amounted to just one-fifth of the roughly 2.5 million that arrived that month in 2019. At the end of October, the Japanese government announced a policy package aimed at restoring full-scale inbound travel, hoping foreign visitors will soon be spending 5 trillion yen a year.
-- Historic yen depreciation makes Japan a weaker economy
While prices have risen in Japan this year, partly due to the soaring cost of raw materials in the wake of Russia's invasion of Ukraine, Japan has endured a long period of deflation. According to analysis by the Organization for Economic Cooperation and Development (OECD), the real average wage in Japan has remained practically flat for the past 30 years, but domestic prices have not risen greatly over that period either, so people generally don't feel they have become poor. However, the weak yen has raised the cost of imports, which has pushed up prices of electricity, food and other items, putting pressure on household accounts. When looking at the spending sprees of foreign visitors, it is evident that the purchasing power of people living in Japan has shrunk.
At the beginning of this year, the yen stood in the range of 115 yen to the dollar, but by October it had weakened to the 150-yen level, the lowest level in 32 years. It has begun to strengthen again since November, recovering to the 136-yen range as of Dec. 7, but the fact remains that the yen has been hovering around historical lows.
Economic analyst Keiichi Kaya points out that the yen's depreciation has brought its relative value against the U.S. dollar down by two-thirds in only around half a year. From the perspective of the United States and other countries, Japan's consumer prices, real estate and wages have fallen to two-thirds of their original levels.
Kaya added, "While a weak yen increases the price of imported goods and energy bills, there are big merits for exports and for inbound tourism. However, when considering the overall balance for Japan, opinions are divided over whether the merits outweigh the negatives."
The reason for that, he said, is that "if depreciation of the yen continues, then many foreign laborers will leave Japan due to its low wages, and personnel shortages could become even more severe." He added, "Generally speaking, a weak currency is not a very good thing because it means that that country's economic power and credit strength have fallen and it has become poor."
The main reasons for the yen's depreciation stem from differences in monetary policy between Japan and the United States that have made it more attractive to purchase the dollar with its high interest rates. However, Kaya points out that the yen's historic low is a result of Japan itself becoming weak economically -- a sign of structural problems such as Japan's dwindling export competitiveness and national power.
"People tend to focus on the effects of inbound tourism right in front of us, but from a mid- to long-term perspective, it would be better to halt the weakening of the yen. To gain ground, we should aim to increase the competitiveness of companies and shift to an economic structure that allows high wages to be paid domestically."
(Japanese original by Sumire Kunieda and Yukako Ono, Digital News Center)