The latest insight from Global Blue has revealed that the ‘No Japan’ boycott has impacted Korean tax free spend in Japan by -40% in Q3 2019.
This is in contrast to the progression of Korean tax free spend in the UK which was up 9% in Q3 and 12% in Q2.
France and Italy saw similar levels of spend progression with increases of 5% and 9% respectively.
In June this year, the Seoul High Court ordered two Japanese companies to pay compensation to seven South Koreans who were forced to work 12 hours per day between 1942 and 1945. A few days after this ruling, Japan announced export restrictions of a few chemicals crucial to the electronic industry due to suspicion of an illegal supply to North Korea
Since then, the message of ‘No Japan’ has become popular across social media and has had a significant negative impact on Japanese brands in Korea, and Japan as a shopping and tourist destination.
This Japanese Tax free dynamic has negatively impacted the overall performance of Tax Free shopping in Asia, as the tax free spend progression in 2019 is constantly the lower per month compared with the previous two years.
RPA Perspective Japanese retail sales plunged in October after a sales tax hike and a super-typhoon kept shoppers at home, a worse-than-expected outcome the government will need to consider as it mulls the size of a spending package to support growth.
Retail sales fell 14.4% in October from a month earlier, more than the drop suffered after a similar tax increase five years ago and the worst drop on record for economy ministry data stretching back to 2002. Economists had forecast a 10.4% decline in sales. Speaking after the release, analysts said the effect of the extreme weather had been larger than initially thought.
The Abe administration wants to avoid a repeat of 2014, when a previous tax increase caused a collapse in consumer spending and a 7.3% contraction in quarterly growth. After that tax increase, retail sales dropped 13.7% month-on-month.
