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Boycott of Japanese goods strikes hard

The main impact is at the beer refrigerator, but it is fast spreading

July 23,2019
A Uniqlo store in downtown Seoul holds sales on Monday. Uniqlo made a second apology after one of its executives claimed earlier this month that a Korean boycott would have little impact. The Japanese fashion brand is one of the brands being targeted in a boycott movement that started earlier this month. [YONHAP]
The boycott against Japanese consumer goods is striking far and wide and at a ferocious pace.

It has been especially apparent in food and beverage sales, as consumers quickly pivot to local brands. At the beer refrigerator, their fury has been decisive.

Despite the spirited response to Japan attacks on the trade front, concerns are growing. People in agriculture and others economically vulnerable could find themselves as collateral damage in the escalating trade war.

According to industry sources, beer has taken the brunt of the boycott because there are so many possible local replacements.

Sales of Japanese beers, such as Asahi and Kirin, at the CU convenience store in the first 18 days of this month fell 40 percent compared to the same period in June.

In the same period, Japanese beer sales at GS25 declined 24 percent, and at 7-Eleven they were down by 18 percent.

The situation was much the same at larger retailers.

Japanese beer sales at Emart declined 30.1 percent between July 1 and July 18 compared to sales in the same period in June. The momentum grew as time progressed.

According to the retailer, in the first week of the month, sales were down by 24.2 percent, but in the second week, they were down 33.78 percent and by the third week it was down 36 percent.

Before Japan decided to retaliate a Supreme Court decision ordering compensation by Japanese companies for forced labor during World War II, Asahi was second among the top-selling imported beers. It is now in 6th place. Kirin, which was 7th, is no longer in the top ten.

Sake has not been spared.

“Sales of sake sold for consumption at home rather than at restaurant have been shrinking,” said a sake importer.

Another sake importer said some retailers are refusing to accept the Japanese products at all.

“In the case of beer, orders have fallen between 30 and 50 percent,” said a Japanese beverage wholesaler.

Although FRL Korea, the local operator of Uniqlo, said it could not disclose how much the boycott has impacted its sales, a local credit card company estimated that Uniqlo sales are down 26 percent. For Muji, a Japanese lifestyle brand, sales are down 19 percent.

Last year, Uniqlo made an estimated 1.3 trillion won ($1.1 billion) in Korea.

Tourism and airlines are also affected.

“Between July 8 and 15, those reserving trips to Japan total around 500 a day, less than half of the 1,100 last year,” said a HanaTour official.

Package tours to Japan sold on Gmarket are down 12 percent between July 8 and 14 compared to the same period a year ago.

Reservations at Japanese hotels are down by 11 percent.

“Through May, [Koreans] traveling to Japan were down 4.7 percent,” said Oh Chang-hee, president of Korea Association of Travel Agents. “By the end of this year, we expect the number of visitors to drop 20 percent to 6.5 million.”

Osaka is now the number five overseas destination for Koreans. That’s down from No. 2 last year. Hotel bookings in Tokyo and Fukuoka were down three notches, ranking eighth and ninth, respectively.

The travel boycott is taking a heavy toll on budget carriers, where trips to Japan account for 20 to 30 percent of their total revenue.

The results of the boycott on Japanese car sales are yet to come. And while orders haven’t been canceled, an industry insider said the number of customers visiting stores is down 20 to 30 percent compared to earlier this year before the Japanese government imposed the trade restrictions.

Japanese cars had been doing well. In the first half, 23,482 Japanese vehicles, including those from Toyota, Honda and Nissan, were sold, up 10.3 percent compared to the same period a year earlier.

“We haven’t seen contracts on new purchases falling,” said a Japanese import brand executive, who requested anonymity. “But looking at past precedents, if the situation continues, it will affect sales.”

While Korean consumers protest through boycotts, some worry that if the effects continue, the Korea economy could take a hit, especially agriculture and fishing.

The Japanese government is already reported to be considering banning the imports of Korean agricultural products and fish.

Japan is the No.1 importer of Korean agricultural, fishery and food products. Last year, $1.3 billion worth was shipped to Japan.

Some question how effective the boycott could be.

“Consumers are actively participating in the boycott and some are even requesting to expand the items [boycotted],” said an official from the Korea Federation of Middle Size and Small Merchant (KFSM), which led to the boycott of Japanese products at small neighborhood shops. “We will continue [the boycott] until Japan signals it will withdraw its economic retaliation.”

But Choi Seong-jae, chairman of the Korea Federation of Micro Enterprise, noted that the boycott could also impact Korean businesses.

“I empathize with the boycott movement,” Choi said. “But there could be those struggling. Isn’t this what Japan truly wants?”

NoNo Japan, the largest website dedicated to boycotting Japanese products, excluded certain items that were previously on its boycott lists after the targets turned out to be 100 percent Korean companies or those that are considered to have major impact on Korean workers.

“Consumer goods traded between the two countries only account for 15 percent of the overall, and most are intermediary goods,” said Kang Sung-jin, Korea University economics professor.

“[The boycott campaign] will not have a huge impact on Japan,” Kang said. “While boycotting trips to Japan could have an effect on certain Japanese regions, it could also affect Korean travel agencies and airliners.”

BY CHUN YOUNG-SUN [kim.heyu@joongang.co.kr]


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