Japan’s tourism-dependent retail sector faces mounting pressure as a significant decline in Chinese visitors threatens to reshape the country’s economic landscape. The downturn follows diplomatic tensions stemming from Japanese Prime Minister Sanae Takaichi’s controversial remarks on Taiwan in November 2025, which triggered a chain reaction affecting bilateral relations.
Industry data reveals a stark picture: mainland Chinese arrivals plummeted 45.3% year-on-year in December 2025 to just 330,400 visitors, continuing a downward trajectory from 562,600 in November. The Japan National Tourism Organization’s January report indicates this trend may intensify during the crucial Spring Festival period (February 15-23, 2026), traditionally a peak season for Chinese tourism.
The economic implications are substantial. Chinese tourists historically contributed 21% of Japan’s 8.12 trillion yen ($51.7 billion) in 2024 visitor spending, particularly favoring luxury goods, cosmetics, and high-end jewelry. The Japan Research Institute projects potential losses reaching 1.2 trillion yen ($7.64 billion) annually if relations continue deteriorating.
Retail institutions are already feeling the impact. Yoshiharu Nishisaka, executive director of the Japan Department Stores Association, reports approximately 40% declines in both Chinese visitor numbers and sales. ‘The negative impact is so large that gains in other regions cannot fully offset it,’ he noted.
Profit forecasts paint a concerning picture for luxury retailers. J. Front Retailing anticipates a 53% operating profit decline, while Matsuya Department Store projects an 81% drop. Overall, department stores face an estimated 24% profit reduction for the December-February period according to Nikkei Asia analysis.
Beyond immediate financial consequences, industry experts warn of longer-term cultural and commercial ramifications. Kenta Maruyama of Mitsubishi UFJ Research notes that reduced tourism diminishes the ‘gateway effect’ through which Chinese visitors develop appreciation for Japanese cuisine and products, ultimately driving demand for Japanese brands within China.
The situation has prompted official responses. China’s Foreign Ministry issued travel advisories on January 26, 2026, warning citizens to avoid Japan during Spring Festival. Major Chinese airlines concurrently offered flexible rebooking options for Japan-bound flights, facilitating the travel reduction.
Industry leaders like Hiroyuki Takahashi, chairman of the Japan Association of Travel Agents, express hope for diplomatic resolution, recognizing that restored people-to-people exchanges are essential for both economic recovery and sustained cultural influence.