Chinese shoppers flock to Japan to take advantage of the weak yen

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******** shoppers flock to Japan to take advantage of the weak yen

Chuo Ward, Tokyo, Japan – February 23, 2018; Top luxury shopping streets with multi ******** neon signs. Ginza avenues are lined with shops of expensive brands and restaurants in the heart of Tokyo. It is half past five p.m. on Friday. People flock to Ginza for shopping, dinner and drinking with their friends. Ginza became synonymous with major shopping districts in Japan.

Marco Ferrarin | Moment | Getty Images

SHANGHAI — Luxury brands are seeing a surge in sales in Japan, largely driven by purchases from ******** travelers taking advantage of a weak yen, according to earnings results this month.

LVMH, Kering and Burberry all noted the uptick, despite weaker sales in China that weighed on overall results.

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for Kering-owned Yves Saint Laurent surged by 42% in the first half of the year “due to strong growth in the number of tourists visiting from China and Southeast Asia, who were attracted by the pricing differential arising from the favorable exchange rate,” the parent company said Wednesday of its second-largest brand.

For the first half of the year, luxury group LVMH this week reported “

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arising in particular from purchases made by ******** travelers.”

The ******** yuan has gained 6.9% against the yen so far this year after this month hitting its strongest level against the ********* currency in at least 24 years, according to Wind Information data going back to 2000.

The yen has fallen to 38-year lows against the U.S. dollar as the interest rate differential between the Federal Reserve and Bank of Japan ******** wide.

Global visitors to Japan surged in the first half of the year, with South Korea accounting for the most travelers, according to the

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.

But visitors from mainland China by far grew the most, surging by 415% in the first half of the year to 3.1 million visitors, the data showed.

Trip.com told CNBC it has seen an increase in spending from ******** travelers heading to Japan in recent months compared to the previous three months. The travel service reported more than 60% growth both in bookings made through their customized travel team, and in their global shopping service, which partners with luxury brands worldwide. Trip did not specify which months, citing forthcoming earnings which have historically been released in September.

On ******** social media sites like Weibo and Xiao Hong Shu, users have shared tips on

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.

One netizen urged fellow netizens to save money —

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. She lauded a shopping mall in Sapporo for being the “top” standard for shopping with a “pretty” Gucci store.

Another post that CNBC viewed saw the creator saying that they

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Affluent ******** households’ interest in visiting Japan rose by 5 percentage points in May versus a survey done last year in September, according to a study by consulting firm Oliver Wyman. The income segment covers families in mainland China earning at least 30,000 yuan a month ($4,140, or about $50,000 a year).

The Oliver Wyman research found that across a variety of luxury products, prices in Japan were 10% to 30% cheaper than in mainland China.

That was a steeper discount than when compared with Hong Kong. For example, a Louis Vuitton Speedy Bandouliere 20 sold for 16,700 yuan in mainland China at the time of the Oliver Wyman study, with a 3% discount in Hong Kong — and a 19% cheaper price in Japan.

Malaysia offered a 10% discount and France a 27% discount, the report said.

It cited an unnamed luxury brand retailer director as saying that “In Asia, Japan has the most comprehensive product range (e.g. style, ******, etc.) besides Hong Kong, across most luxury brands.”

Slower growth in China

******** shoppers’ interest in Japan comes as overall ******** luxury spending has declined amid uncertainty about future income. Locals have also increasingly preferred to take cheaper vacations within mainland China.

About half of ******** luxury spending took place abroad prior to the pandemic, but that has now halved to about 20% to 25%, according to Oliver Wyman.

Japan was the fourth-most popular destination for overseas luxury shopping, although Hong Kong remained by far the most popular site, followed by Macao and Singapore, the report showed, as of May.

“Globally, the ******** customer group also declined but held up better than Mainland China as spend was diverted offshore,” Burberry said in its earnings release earlier this month. “Japan continued to grow, benefitting from strong tourism spend mainly from ******** and near shore customers in Asia, whilst locals remained soft.”

Burberry’s mainland China sales fell by 21% in the latest quarter from a year ago, while those in Japan rose by 6%. An overall decline in global sales prompted the luxury brand to issue a profit warning and suspend its dividend, as well as replace its CEO.

In the three months ending March 30, Coach owner Tapestry saw Greater China sales, which includes mainland China, Hong Kong, Macao, and Taiwan, drop by 2%. But Japan sales rose by 2% during that time. The company has yet to schedule its next earnings release.

— CNBC’s Sonia Heng contributed reporting from Singapore.

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