TOKYO — As the number of people affected by the novel coronavirus, now known as covid-19, continues to rise, so do its effects on countries outside of China. While Japan has so far only recorded one death from the virus, the scale of the economic impact is already appearing to be much greater.
On Monday, Japanese officials confirmed 99 more cases of the coronavirus aboard the cruise ship Diamond Princess, which remains quarantined in the port of Yokohama. Separately, the U.S. State Department announced that 14 evacuees from the ship who had been flown back to the U.States were also infected.
Even before those new cases were reported, Japan’s health minister Katsunobu Kato on Sunday urged members of the public to avoid crowded places and “nonessential gatherings,” including commuter trains. This came after Japan entered a new phase of the virus late last week, when the country’s first cases with no clear chain of transmission were reported.
While cases of the virus in Japan are likely to continue to rise, so are its affects on the country’s economy. In December, the country welcomed more than 2.5 million overseas visitors, more than 28 percent of whom were from China, according to preliminary figures released by the Japan National Tourism Organization. That’s more than twice as many visitors than those who came from Taiwan, the second largest group. But the virus has resulted in both flight cancellations and immigration restrictions, meaning these numbers likely suffered a steep drop since the start of 2020. According to data from the Japan Association of Travel Agents, at least 400,000 travelers from China are expected to cancel trips through March.
Chinese travelers to Japan are known for their spending habits, often engaging in large shopping sprees of everything from luxury goods and cosmetics to everyday items. Without this cash coming into Japan’s economy, several retailers are expected to suffer.
On Jan. 31, Isetan Mitsukoshi Holdings cut its sales and profit forecasts for its fiscal year ending March 31. It cut its net profit forecast in half, from 14 billion yen to 7 billion yen. Separately, a spokeswoman for the company, which is Japan’s largest department store operator, confirmed Monday that the company’s buyers would not be attending Europe’s fashion weeks because of the virus.
“The virus is having a particular impact on department store sales to visiting customers from overseas,” the spokeswoman said. “While we cannot say when the outbreak will end, the number of customers who are refraining from going out to nonessential and non-urgent places is increasing, which we expect will also lead to a decrease in customers who visit department stores.”
Fast Retailing said as of Monday, 350 of its Uniqlo stores in China are temporarily closed, in addition to 27 Theory stores.
“Most of these stores are either in large retail malls, which have been temporarily closed or in areas where the local government has temporarily ceased transportation to and from,” a spokesman for Fast Retailing said, adding that an impact on the company’s performance is expected.
Shiseido said its offices in China restarted operations from Feb. 10 after a long Chinese New Year holiday, but most of its employees are working at home until at least Feb. 24. The company’s factories in China — one in Shanghai and one in Beijing — will also restart full-scale production from around Feb. 24. In addition, the company said it is discouraging employees to travel overseas for business until the end of March. Business travel of all Shiseido Group employees to China has been banned.
While Shiseido has not disclosed figures or forecasts related to the covid-19 virus, a spokesman said it will “certainly have a negative impact on our sales in both China and Japan.”
Kanebo’s offices in China resumed operations from Feb. 11, but like Shiseido, many employees continue to work from home. More than half of the company’s stores in China remain closed.
Yasushi Nakamura, president of Kanebo Cosmetics China, said the viral outbreak will have a significant impact on brick-and-mortar retail, particularly in relation to color cosmetics.
“If the crisis converges, the cosmetics market should return to its original growth course, but if the crisis is prolonged, bankruptcies and further restructuring could push the economy into a downturn,” Nakamura said. “In that scenario, the cosmetics market is also expected to slow down.”
Major events in Japan are also being canceled or scaled back. On Monday, the Imperial Household Agency said Emperor Naruhito would not hold the traditional birthday greeting that was scheduled for Feb. 23. It would have been his first since he ascended to the throne last year.
Numerous trade shows across a variety of industries have also been canceled or rescheduled, including Asia’s major camera show, which was scheduled to run from four days from Feb. 27 in Yokohama. In the fashion industry, the inaugural Denimsandjeans Japan fair, scheduled for March 4 and 5 in Tokyo, has been canceled, and the Asia Apparel Expo in Berlin has been postponed from February until late June.