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Japan-South Korea rift

South Korean boycott hits Japan's major brands and tourism outlook

Uniqlo and Kirin warn of impact while analysts predict 'sharp drop' in visitors to Japan

TOKYO/SEOUL -- A boycott by South Korean consumers is hitting some of Japan's biggest brands and casting a shadow over the country's tourism industry as political tensions between Seoul and Tokyo continue to rise.

The hashtag #boycottjapan, aimed at consumer brands such as Sony, Toyota, Uniqlo and Canon, began trending on Instragram and other social media platforms following Japan's decision this month to restrict exports to South Korea

Tokyo says the restrictions -- which cover exports of chipmaking materials essential for semiconductor manufacturers such as Samsung Electronics and SK Hynix -- were prompted by concerns over South Korea's export controls. Some however see the move as retaliation for a spate of South Korean court rulings that allow assets of Japanese companies to be seized and used to compensate Korean victims of wartime forced labor.

Angered by Japan's move, some South Korean retailers have taken to the streets and stomped on boxes of Japanese products. A popular South Korean YouTuber, meanwhile, shared a video of himself tearing up a plane ticket to Japan.

Fast fashion retailer Uniqlo and beverage maker Kirin Holdings say they are already feeling the heat.

Takeshi Okazaki, director of Uniqlo parent Fast Retailing, said the boycott is affecting its sales in South Korea but it is unclear how long that will continue. "It will affect business in the short term," he said at a recent press conference. "We are observing the possibilities when it comes to reviewing further impact." 

Kirin halted its plan to launch a new TV commercial to promote its beer in South Korea, according to a spokesperson. The company said that the boycott "could affect shipments if retailers continue to reduce purchase."

Japan Tobacco has announced it will launch its new Ploom Tech tobacco vapor product in South Korea this month as planned, but it canceled the press conference last week, citing "internal reasons" at the company.

Other companies, including Sony and Shiseido, say they are "carefully watching" the situation.

According to a poll by Realmeter this week, 54.6% of Korean respondents said that they are boycotting Japanese products, up from 48% a week ago, in protest at Tokyo's economic restrictions against South Korea.But the total of number of respondents who said they either have joined the boycott or plan to do so dropped slightly to 66% from 66.8%. 

With no sign of the South Korean government changing its stance regarding the wartime labor ruling, companies "need to consider the possibility that this situation will continue," said Michinori Naruse, a researcher at Japan Research Institute.

Japan's tourism industry and hotel business is also at risk, according to analysts, as South Korean visitors have been a major contributor to the industry recently.

According to Naruse, a drop in tourism would likely do more damage to the Japanese economy than the boycott of goods, considering that the country's consumer brands have relatively limited exposure to the South Korean market.

Hwang, a public relations manager at a South Korean bank who asked to be identified only by his surname, said he is considering canceling his family trip to Japan this year due to rising tensions between the two countries.

"I planned to visit Japan for summer holidays, but I think it is not a good timing now," Hwang said. "My daughter loves Japan for the interesting places and delicious food, but I can't help but think of the unfavorable mood here."

Koo Kyung-hoe, an analyst at KB Securities, warned of trouble ahead. "In light of the boycott of Japanese products in South Korea, it is highly likely that South Korean tourists to Japan will drop sharply," Koo said.

South Koreans accounted for 24% of total foreign visitors to Japan last year, according to KB Securities. Their numbers rose by 2.05 million in 2017, accounting for 44% of total increase that year.

One travel agency with a strong South Korean customer base said that while it is still receiving new bookings, it has seen an increase this month in South Korean customers canceling their plans to visit Japan.

An official at Japan's Tourism Agency said there have been a number of cancellations of corporate-funded tours, in which companies reward their employees with paid trips, that seem to be related to the current political situation. The official said the impact on individual customers in July has been limited.

Past boycotts of Japanese products in South Korea, such as in 1995 and 2001, typically cooled down within a year, said Daisuke Tomoda, of the Japan External Trade Organization's China and North Asia division. "I can't say for sure that it will be the same this time, [so I'm] watching the situation," Tomoda said.

In the meantime, sentiment in Japan seems less affected by the political spat. Popular K-pop group BTS attracted 210,000 fans over four days of concerts in Japan, according to media reports.

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