Foreigners Visiting for a Few Days Spend as Much as My Salary... Japan's Economy Laughs and Cries Over 'Enbound' [News Terms]

Increase in Foreign Visitors' Spending in Japan Due to Weak Yen
Price Hikes Cause Polarization in Japanese Consumer Market
Foreign Inbound vs. Domestic Consumers' Saving Orientation

'Enbound' is a term combining 'Enjeo (円安)', which refers to the depreciation of the yen against the dollar, and 'Inbound', a travel industry term meaning 'foreigners traveling domestically'. In other words, it describes the phenomenon of increased spending activity by foreign tourists visiting Japan due to the weak yen.

Enbound is one of the four major keywords representing recent trends in the Japanese consumer market. KOTRA published a report last month titled 'Japanese Consumer Market Trends and Opportunities for Korean Consumer Goods through Four Major Keywords,' presenting Enbound along with Inflation, Solo Living, and Digital as the four key trends.

[Photo by AI Image]

The Japanese government lifted mandatory quarantine measures for foreign arrivals last year. As a result, the number of foreign tourists entering Japan and their travel expenditures have recovered to pre-COVID-19 levels. Last year, the number of foreign tourists visiting Japan was 25.06 million, about 80% of the 31.88 million visitors in 2019 before the pandemic. The total travel expenditure of these tourists increased by 9.9% compared to 4.8113 trillion yen (43 trillion KRW) in 2019, reaching a record high of 5.2923 trillion yen (47 trillion KRW). Per capita spending also reached 212,000 yen (1.93 million KRW).

In the second quarter of this year, foreign tourists continued to spend generously. According to the Japan National Tourism Organization (JNTO), the average spending per foreign visitor in Japan during the second quarter was 238,722 yen (2.15 million KRW). Total travel expenditure amounted to 2.137 trillion yen (19 trillion KRW), an increase of 73.5% compared to the same period last year and 68.6% compared to 2019 before the pandemic. The Japanese government is pursuing tourism promotion policies next year with goals of exceeding 200,000 yen (1.8 million KRW) per capita spending and surpassing the number of tourists in 2019.

Sales at major department stores, duty-free shops, and drugstores in Japan have also recovered accordingly. The Japan Department Stores Association analyzed that department store sales have increased for 28 consecutive months. Duty-free sales at department stores have also risen for 27 consecutive months. The reason foreign tourists perceive their consumption experience in Japan as 'cost-effective' is attributed to the Enjeo phenomenon.

[Photo by AI Image]

However, Enbound does not only have positive effects on the Japanese economy. It has also contributed negatively by causing price increases in the domestic consumer market. A representative example is the rise in prices of seafood dining in tourist areas. For instance, the price of a sashimi rice bowl at a store in Senkaku Banrai, a commercial facility recently opened in the Toyosu area of Tokyo, is about 6,980 yen (62,800 KRW). This is more than 5,000 yen (45,000 KRW) higher than prices in other parts of Tokyo.

Japanese experts diagnose that despite the increase in tourists, the real income decline is worsening the economic sentiment among Japanese residents. In September, both real consumer spending and real wages in Japan decreased for two consecutive months. The real consumer spending in September, reflecting economic sentiment, was 287,963 yen (2.59 million KRW) per household per month, a 1.1% decrease compared to the same month last year, according to the Ministry of Internal Affairs and Communications. According to the Ministry of Health, Labour and Welfare, the average nominal monthly wage per worker in companies with five or more employees was 292,551 yen (2.63 million KRW), a 2.8% increase from the same month last year. However, when adjusted for price changes, real wages actually decreased by 0.1%.

As a result, the Japanese consumer market is becoming polarized. On one side is 'Inbound Consumption (Enbound)', led by foreign tourists whose purchasing power has increased due to the weak yen and who drive premium product consumption. On the other side is 'Savings-Oriented Consumption', where Japanese residents respond to rising prices by cutting back on spending.