business

Diplomatic row with South Korea starts to hurt Japan's services account

41 Comments
By Tetsushi Kajimoto

Japan's surplus in spending by overseas travelers declined in July from a year earlier as the number of visitors from South Korea tumbled, a sign the souring bilateral relations are taking a toll on the world's third largest economy.

The travel account surplus - or the amount spent in Japan by foreign visitors minus that by Japanese traveling overseas - shrank 0.9% in July from a year earlier to 229.3 billion yen, current account data by the Ministry of Finance showed on Monday.

Japan's decision in July to tighten controls on exports of materials to South Korea, which are used to make semiconductors, has prompted a backlash in Korea, with consumers boycotting Japanese goods and cancelling tours to the neighboring country.

In July, the number of South Korea visitors dropped by 7.6% from a year earlier - and was the lowest in nearly a year, according to Japanese government data.Such a drop is "certainly a factor" in the travel services account, a finance ministry official said. "We are monitoring developments."

The decline in the travel account surplus helped cause a 32% rise in Japan's service account deficit, the data showed. As a result, Japan's overall current account surplus fell 1.4% in the year to July to 1.9999 trillion yen ($18.72 billion), largely in line with economists' median forecast for a surplus of 2.0832 trillion yen.

The drop in South Korean tourists is a blow to Prime Minister Shinzo Abe's plan to make inbound tourism a pillar of Japan's economic growth, and comes at a time the export-reliant recovery is hit by slowing global demand and the Sino-U.S. trade war. Since Abe took office in late 2012, foreign visitors to Japan have more than tripled to 30 million people as of 2018, helped by a weaker yen and easing of visa requirements.

Abe's government set a target to increase the number of foreign visitors to 40 million by 2020 and 60 million by 2030. South Koreans account for the second largest chunk of visitors to Japan at around 7.1 million in 2017, following Chinese at 7.4 million, according to government data.

In the balance of payment data since 1996, travel accounts are included in service accounts, which cover transactions for tourism and logistics with other countries. The travel account surplus rose 3% to a record 1.3 trillion yen in January-June from the same period a year earlier, helping the service account balance swing to a surplus for the first time.

Japan's current account surplus mainly consists of income gains from foreign direct investments, and services including money spent by overseas travelers, while the trade balance tends to log deficits due to trade frictions and weak global demand.

© (c) Copyright Thomson Reuters 2019.

©2019 GPlusMedia Inc.

41 Comments
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The South Korean economy is on the decline, only makes sense that people with less money travel less. While the current spat can play a small part in fewer South Koreans visiting, it's not the biggest by far.

13 ( +18 / -5 )

In July, the number of South Korea visitors dropped by 7.6% from a year earlier 

You’d figure that since SK visitors are the largest in terms of sheer numbers, the financial decline would be on par with the percentage but nope. Less than a percent. This essentially supports the figure published by the Japan Tourism Agency that Koreans are dead last in the amount they consume while in Japan.

12 ( +20 / -8 )

 the amount spent in Japan by foreign visitors minus that by Japanese traveling overseas - shrank 0.9%

Less then one percent is considered as natural flux in flow of travelers.

the number of South Korea visitors dropped by 7.6% from a year earlier

The decline in the travel account surplus helped cause a 32% rise in Japan's service account deficit, the data showed. 

No this is not about less inbound from Korea but more about less spending by the Chinese visitors. This writer is comparing apples with oranges to write an article to fit his already made conclusion.

11 ( +17 / -6 )

I meant, Koreans per person are dead last in the amount they consume while in Japan.

10 ( +18 / -8 )

Cherry-picked statistics to suit the writer's rhetoric. Anyone racist enough to buy into this boycott Japan rubbish was probably never going to go there anyway.

10 ( +15 / -5 )

Doesn't it have to do with which tourists spend the most money, not which countries send the most tourists?

10 ( +14 / -4 )

Honestly, I think this news is forced to fit some narrative too, since I read tourists in Japan overall increased, despite the Koreans' decline. Chinese are spending a bit less because of the crisis with the US, but it's only natural, can't be avoided.

10 ( +13 / -3 )

Do any of you have any idea what will happen once China closes shop? 

Does not have anything to do with Koreans since they are not spending anywhere near Chinese visitors in the first place.

japan needs visitors to prop up the fledgling economy

Japan's economy is not fledgling, where did you get that notion?

It's doing much better than SK economy that is for sure.

You can fool some people some of the time but you can't fool all the people all the time.

The only one you are fooling is yourself. LoL

8 ( +13 / -5 )

TriringToday  09:29 am JST

No this is not about less inbound from Korea but more about less spending by the Chinese visitors. This writer is comparing apples with oranges to write an article to fit his already made conclusion.

Exactly.

nigelboyToday  08:14 am JST

I meant, Koreans per person are dead last in the amount they consume while in Japan.

Again, exactly. Many South Korean visitors aren't 'tourists' in the sense that is being used in this article, many visit family members who are citizens or long term residents, and others for (undisclosed) business purposes.

Many aren't like other tourists who want to see and buy as much as they can, while they can.

Anyway, this is just another non-story related to the fallout of Japan taking away preferential treatment for exports of certain sensitive high tech materials - that South Korea can still obtain through usual means, just like Taiwan - to make it look like Japan has done some massive injustice to South Korea, when it is exactly the other way around.

Try again, tabloid media...

7 ( +14 / -7 )

Wallace FredToday  12:31 pm JST

Expected and the least surprising living in denial responses here. How can you not realize korea isn't going to be the last? Do any of you have any idea what will happen once China closes shop? japan needs visitors to prop up the fledgling economy after all the arrows missed as expected. You can fool some people some of the time but you can't fool all the people all the time.

If you were to believe the hyped up, quasi-factual, misrepresented articles in the tabloid media, then yes, you could say you have been fooled. But notice how half the posters here see through the poorly written prose and see the actual situation and correct it in their comments? That's a natural reaction to the media attempting to skew reality in order to grab headlines and curious eyes/ears. One first has to be aware of the pathetic role mainstream media occupies these days in order to think critically. Insulting people who are doing that for the benefit of others (assuming they read their replies) is the definition of lunacy.

0 ( +3 / -3 )

A 7.6% drop in visitors from SK only resulted in a 0.9% reduction in tourist spending, because the overall foreign visitor numbers increased 5.6% in one month. If spending by SK visitors only was analysed, the drop would be closer to the 7.6% figure.

As the article indicates, it's a 0.9% reduction in " travel account surplus "- or the amount spent in Japan by foreign visitors minus that by Japanese traveling overseas .

Based on JNTO figures which also states 5.6% increase, there was also a 6.5% increase in Japanese traveling abroad. Hence, the major factor in the 0.9% reduction on the account surplus.

As for the Koreans not spending much, here it is. (Pg 3)

69,013 yen/person. Dead last. No nationality even comes close.

http://www.mlit.go.jp/common/001299606.pdf

0 ( +1 / -1 )

if you look at the TOTAL annual sums spent by SK visitors rather than PER visit they won't be anywhere near 'dead last' but rather near the top of the list.

That's a non-sequitur. Your conclusion is not able to be logically concluded from the argument you provided.

0 ( +1 / -1 )

That's a non-sequitur. Your conclusion is not able to be logically concluded from the argument you provided.

@Strangerland - how so? Posters have argued that SK visitors aren't worth much to Japan's economy as they do not spend as much as other visitors PER VISIT, but if they visit much more frequently and spend more TOTAL annual sums, how can the argument that SK visitors are not valuable stand?

In business terms if a customer spends $100 each time and and returns 5 times a year, are they not more valuable than a $200 per visit, once a year customer? I would love your explanation on why my argument does not stack up logically, because I am certain it does.

0 ( +0 / -0 )

Not really cherrypicking. Personally, the government should consider more on quality than quantity so to reduce over crowding. Hence, they should eliminate visa free status of Koreans and make them adhere to minimum financial requirements like the ones implemented for Chinese nationals.

@nigelboy - Overcrowding? Does an international visitor staying for 5 days per visit and visiting 3 times a year crowd the streets of Japan anymore than a visitor staying for 15 days, once a year?

And restricting SK visitors would do wonders for Japan's travel account surplus wouldn't it.. further restrict visitors by adding visa requirements when visitors are already down.

0 ( +0 / -0 )

Wouldn’t it be nice for instance, for Kyoto to have less travelers but spend a quite a bit more per person than having an overcrowded situation where 20% of them are simply cheap tourists who are essentially a space eater?

@nigelboy - again, you talk about sum spent per person PER VISIT due to relatively shorter stays by visitors from SK, ignoring the total sum spent being greater through more frequent visits.

That's where we can disagree - Japan relies hugely on income from tourism, and is in no position to pick and choose what visitors they receive.

0 ( +0 / -0 )

Neither of those can be concluded just by looking at the annual sums. You would need to then compare that to how other countries have fared. As such, your conclusion is not able to be logically concluded from your premise.

Your conclusion may be correct, but it would be coincidental, not due to any logical process you've gone through above.

@Stranger

Premise of many posters here on JT:

"SK visitors to Japan spend less per visit than visitors from other countries".

Conclusion drawn by the same posters:

"SK visitors are therefore not valuable to Japan's economy."

Do you see how their argument fails for the exact same reasons you have stated? But interestingly you chose to only selectively rebut my arguments.

What you're saying is my argument would be correct if I can prove that total SK visitor expenditure stacks up favourably vs expenditure by visitors from other countries.

Well then here it is - on page 2, SK visitors are 3rd only to China and Taiwan when it comes to TOTAL visitor expenditure.

http://www.mlit.go.jp/common/001299606.pdf

Would love your comments on those figures.

0 ( +0 / -0 )

Well no, what I said was that you had posted was a non-sequitor. You posted a premise, with an illogical conclusion. As I said, the thing you concluded may actually be correct, but that would be coincidence, as it could not logically be concluded from your premise.

@Stranger - Let me break it down for you.

My position: "It is illogical to argue that SK visitors are not valuable to Japan simply on the basis of data showing SK visitors spend less per visitor, PER VISIT to Japan, as TOTAL annual spend through larger visitor numbers and more frequent visits would likely see SK place much higher.

There is absolutely nothing illogical or 'non sequitur' about what I said.

It was a suggestion rather than an assertion of fact as I did not have the actual figures to back up my argument at the time, but the link posted above by nigelboy indeed proved my suspicion, that SK visitors rank 3rd in total spend, only behind China and Taiwan.

0 ( +0 / -0 )

No where within you argument have you provided any substantial evidence that the same person is coming back as repeaters within the same year thus Strangerland pointing out it is non-sequitur or just pure speculation on your part without proof. Do you understand?

@Triring - Repeat visitors or multiple single visitors - my evidence is only anecdotal but does it matter?

SK visitors are 3rd only after China and Taiwan in total tourist expenditure in Japan annually, despite the lower per person, per visit expenditure being lower than other countries.

That is the basis on which I countered the argument that SK visitors are not worth much to Japan's economy. In which universe is the country ranking 3rd in total tourist expenditure not valuable to the country's tourism industry/ economy?

0 ( +0 / -0 )

The only way it can be concluded is through a comparison with values in other countries. The total annual sum of SK in isolation isn't enough information to determine where it would rank in comparison to other countries.

@Stranger - I dare say that country vs country total annual visitor expenditure is one of the most important metrics in determining the economic value of each country's international visitors to Japan.

If you disagree, then I wonder what other metric you suggest to measure it.

Other posters have used the low 'per visitor, per visit' expenditure of SK visitors as the metric on which to dismiss the value of SK visitors, and I provided evidence that SK ranks highly in total visitor expenditure to Japan. That is what I've been saying all along.

The only way it can be concluded is through a comparison with values in other countries. The total annual sum of SK in isolation isn't enough information to determine where it would rank in comparison to other countries.

But I did provide a ranking of total SK visitor expenditure in comparison to other countries - they rank 3rd after China and Japan, not anywhere near 'dead last' which is how they rank on a 'per visit' expenditure. I did say it was merely a suggestion, until I had the figures, when it became fact.

And for the last time, yes what I've said so far is logically sound. Your repeated 'non sequitur' rebuttals are anything but.

0 ( +0 / -0 )

correction: "rank 3rd after China and Taiwan"

0 ( +0 / -0 )

Strangerland you're either backtracking and nit-picking, or you're 'avin a laugh.

Posters arguing SK visitors are not worth much to Japan's economy based on a 'dead last' PER VISIT expenditure alone (while ignoring the geographical proximity allowing for much shorter trips) - now THAT is non sequitur.

Countering that argument by SUGGESTING (which by definition does not need to based on logic, but anecdotal evidence or even just a hunch) that TOTAL annual expenditure SK visitors would probably be 'near the top of the list' rather than 'dead last', and subsequently PROVING on request that they are in fact 3rd on the list, would be completely sound in anyone's mind except yours.

0 ( +0 / -0 )

Countering that argument by SUGGESTING (which by definition does not need to based on logic, but anecdotal evidence or even just a hunch) that TOTAL annual expenditure SK visitors would probably be 'near the top of the list' rather than 'dead last', and subsequently PROVING on request that they are in fact 3rd on the list, would be completely sound in anyone's mind except yours.

I never suggested this.

You keep posting things you claim I've said or am saying, that I haven't said and am not saying. Are you mistaking me with another poster?

0 ( +0 / -0 )

@nigelboy - again, you talk about sum spent per person PER VISIT due to relatively shorter stays by visitors from SK, ignoring the total sum spent being greater through more frequent visits.

Not really. How should I put this mildly?

Koreans constitute 19% of the total visitors to Japan. On the other hand, total sum consumed by Koreans is only at 9.6% of the total.

http://www.mlit.go.jp/common/001299606.pdf

Quality versus quantity. If the Japanese government thought this though, Koreans are essentially a space hogger in an overcrowding tourists situation in Japan. I thought I made that clear.

0 ( +0 / -0 )

Wow comments stating 'SK visitors don't spend much while in Japan anyway'. Classic sour grapes.

Accusing the mainstream media of having some rhetoric or narrative, whilst themselves desperately denying that reduced visitors from SK have contributed to a reduction in spending by foreign visitors, coming up with a variety of reasons other than the obvious.

Do you realise that is also a narrative and misrepresentation?

-1 ( +0 / -1 )

You’d figure that since SK visitors are the largest in terms of sheer numbers, the financial decline would be on par with the percentage but nope. Less than a percent. This essentially supports the figure published by the Japan Tourism Agency that Koreans are dead last in the amount they consume while in Japan.

@nigelboy - If you figure that, you'd be wrong.

This is from another news source:

Overall tourist arrivals from across the globe rose 5.6 percent in July, the data showed, boosted by an almost 20 percent jump in visitors from China. For the year to date, the overall arrivals from overseas have reached 19.6 million.

https://www.japantimes.co.jp/news/2019/08/22/business/south-korean-tourists-shun-japan-trade-row/#.XXgCTCgzZPY

A 7.6% drop in visitors from SK only resulted in a 0.9% reduction in tourist spending, because the overall foreign visitor numbers increased 5.6% in one month. If spending by SK visitors only was analysed, the drop would be closer to the 7.6% figure.

It goes against what many posters here are saying, that Chinese are the big spenders, and that SK visitors essentially don't matter.

By your logic, an increase in visitor spending would be on par with the near 20% jump in the big spending Chinese visitors, but nope, an actual drop by 0.9%. But how could it be? I mean SK visitors don't spend much in Japan, right? Or wrong?

-1 ( +0 / -1 )

So who's cherry-picking the data to suit one's narrative?

Not really cherrypicking. Personally, the government should consider more on quality than quantity so to reduce over crowding. Hence, they should eliminate visa free status of Koreans and make them adhere to minimum financial requirements like the ones implemented for Chinese nationals.

-1 ( +0 / -1 )

 Overcrowding? Does an international visitor staying for 5 days per visit and visiting 3 times a year crowd the streets of Japan anymore than a visitor staying for 15 days, once a year?

Yes. Overcrowding. Wouldn’t it be nice for instance, for Kyoto to have less travelers but spend a quite a bit more per person than having an overcrowded situation where 20% of them are simply cheap tourists who are essentially a space eater?

And restricting SK visitors would do wonders for Japan's travel account surplus wouldn't it.. further restrict visitors by adding visa requirements when visitors are already down.

Yes. While it may hurt short term, the long term benefit would be for more quality tourists to have access to Japan like lodging.

-1 ( +0 / -1 )

@Strangerland - how so?

Premise:

if you look at the TOTAL annual sums spent by SK visitors rather than PER visit

Conclusion:

they won't be anywhere near 'dead last' but rather near the top of the list.

Neither of those can be concluded just by looking at the annual sums. You would need to then compare that to how other countries have fared. As such, your conclusion is not able to be logically concluded from your premise.

Your conclusion may be correct, but it would be coincidental, not due to any logical process you've gone through above.

-1 ( +0 / -1 )

@Stranger

Premise of many posters here on JT

How would the premise of other posters have any bearing on whether or not the post you made was a non-sequitur?

What you're saying is my argument would be correct if I can prove that total SK visitor expenditure stacks up favourably vs expenditure by visitors from other countries.

Well no, what I said was that you had posted was a non-sequitor. You posted a premise, with an illogical conclusion. As I said, the thing you concluded may actually be correct, but that would be coincidence, as it could not logically be concluded from your premise.

-1 ( +0 / -1 )

Your comments kind of make me suspect you don't know what 'non-sequitur' means, or what it is.

-1 ( +0 / -1 )

@Heckleberry

No where within you argument have you provided any substantial evidence that the same person is coming back as repeaters within the same year thus Strangerland pointing out it is non-sequitur or just pure speculation on your part without proof.  Do you understand?

-1 ( +0 / -1 )

If you disagree, then I wonder what other metric you suggest to measure it.

Are you reading my posts? I haven't commented on your metric one way or the other, to either agree or disagree with it.

I did provide a ranking of total SK visitor expenditure in comparison to other countries

Yes, after you first made the non-sequitur I originally pointed out.

And for the last time, yes what I've said so far is logically sound. Your repeated 'non sequitur' rebuttals are anything but.

Except that there is proof that it's not 'anything but', the proof being the non-sequitur you posted, that I pointed out:

if you look at the TOTAL annual sums spent by SK visitors rather than PER visit they won't be anywhere near 'dead last' but rather near the top of the list.

This is clearly a non-sequitur. You posted information after this to support your conclusion, but that doesn't change the fact that your original conclusion was, counter to your denials, a non-sequitur, based on not being able to be logically concluded from your premise.

-1 ( +0 / -1 )

Strangerland you're either backtracking and nit-picking, or you're 'avin a laugh.

No, I haven't backtracked whatsoever. I've been non-stop consistent from my first post.

1) You posted a non-sequitur

2) I pointed that out

3) You posted additional information, and tried to say that somehow your additional information stopped your original statement from being a non-sequitur. But your additional information was not provided as part of the original statement when you made it, and additional information posted after the fact does not change that it was a non-sequitur when you posted it.

You keep trying to claim that the additional information you provided after the fact somehow has relevance even though it didn't exist when you posted the non-sequitur.

Sorry mate, don't work like that.

-1 ( +0 / -1 )

Readers, you are going around in circles.

No worries. The SKoreans will be back.

-2 ( +5 / -7 )

Based on JNTO figures which also states 5.6% increase, there was also a 6.5% increase in Japanese traveling abroad. Hence, the major factor in the 0.9% reduction on the account surplus.

As for the Koreans not spending much, here it is. (Pg 3)

69,013 yen/person. Dead last. No nationality even comes close.

http://www.mlit.go.jp/common/001299606.pdf

@nigelboy - Not debating those figures. Due to the short distance SK visitors travel to Japan like they travel domestically, often for short trips or even weekend getaways, for example 2-3 day golf holidays or onsen visits.

So PER VISIT, visitors from SK will spend less than visitors from the likes of UK/USA/Australia who typically stay for weeks, having flown from half way across the world. However SK visitors do make up something like 24% of all foreign visitors to Japan, so if you look at the TOTAL annual sums spent by SK visitors rather than PER visit they won't be anywhere near 'dead last' but rather near the top of the list.

So who's cherry-picking the data to suit one's narrative?

-2 ( +0 / -2 )

I told you so! This spat between Japan and SK is spilling over into the economy here and is causing problems for businesses and the average person alike!

Get it settled! Before you decide to shoot yourselves in the other foot too!

-5 ( +12 / -17 )

The decline in the travel account surplus helped cause a 32% rise in Japan's service account deficit, 

And guess what, it's just getting started. When people look up shooting yourself in the foot and face at the same time in the future, this blunder by abe and his right wing regime will be the case study.

-6 ( +13 / -19 )

Expected and the least surprising living in denial responses here. How can you not realize korea isn't going to be the last? Do any of you have any idea what will happen once China closes shop? japan needs visitors to prop up the fledgling economy after all the arrows missed as expected. You can fool some people some of the time but you can't fool all the people all the time.

-9 ( +5 / -14 )

“The drop in South Korean tourists is a blow to Prime Minister Shinzo Abe's plan to make inbound tourism a pillar of Japan's economic growth”

Lets call this the fourth arrow. Strike four. Who’s advising our Dear leader? He should look elsewhere. Just wait. If ever the constitution is revised, these figure will pale in comparison to what Asians will do. Is Mr. Moon helping Mr. Abe prepare for the future?

-14 ( +4 / -18 )

Ahh beautiful Japan, Shinz good job as always.

-14 ( +3 / -17 )

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