Background
Following controversial remarks concerning Taiwan made earlier by a Japanese leader, Chinese government agencies, including the Ministry of Culture and Tourism and the Ministry of Foreign Affairs, issued a series of travel and study safety warnings for Japan between Nov 14–16, 2025. These warnings explicitly advised Chinese citizens to avoid traveling to Japan in the near term. This official alert translated into a concrete contraction at the market level, resulting in negative feedback within Japan's tourism, consumption, and other related sectors.
The Spending of Chinese Visitors in Japan Declined Sharply
According to official Japanese data, Chinese tourists have become a crucial driving force for Japan's tourism consumption, with their spending scale directly impacting the performance of the tourism, retail, and service industries. Based on official Japanese data, the number of Chinese visitors (excluding Hong Kong and Taiwan) accounted for 18% of the total overseas visitor count in 0ct-25, +23% y/y. In 3Q25, the spending by Chinese visitors (excluding Hong Kong and Taiwan) constituted 28% of the total spending by overseas tourists, +18% y/y.
Following the issuance of a travel safety warning on Nov 14th, Chinese airlines immediately saw a surge in massive flight cancellations and ticket refunds for flights to Japan. This impact quickly rippled through Japan's local tourism industry chain. Official data on foreign visitors to Japan revealed that Chinese travelers (excluding Hong Kong and Taiwan) y/y slowed down to +3% in Nov-25. Industries heavily reliant on Chinese tourist traffic—from accommodation and catering to duty-free shopping—widely felt the chill. According to Sandalwood data, the spending by Chinese tourists in Japan has shown a clear downward trend since Nov 17th, sliding to a three-year low in Dec. Specifically, Japanese department stores weekly sales value y/y (including Isetan/J. Front Retailing/ Takashimaya) showed significant declines.
Chart 1：Sandalwood data captured the spending by Chinese tourists in Japan has shown a clear downward trend since Nov 17th.
Chart 2：Sandalwood data captured Japanese department stores weekly data y/y showed significant declines.
New Beneficiary
According to World Tourism Organization, China's total outbound tourism expenditure reached $251 billion in 2024, +30% y/y and +3% higher than pre-pandemic levels, further solidifying its position as the world's largest tourism spending nation.
As Sino-Japanese relations fluctuate recently, the travel choices of Chinese tourists are rapidly shifting, creating a favorable situation for other surrounding tourism countries. Destinations like Hong Kong and South Korea are the first to capture this demand due to advantages such as warmer climates, numerous performance events and easy visa policy making them clear short-term beneficiaries.
Chart 3：Tourism Retail + Services Value Y/Y - Sandalwood data (ex-Mainland China)
Outlook
It has been over a month after the controversial remarks, with Chinese tourists' enthusiasm for traveling to Japan continuing to wane. While domestic sales of Japanese brands currently remain stable, the sustainability of this trend and its potential downstream impact remain to be further verified by the market.
Sandalwood data closely tracks broad sectors including apparel and sportswear company sales, with granularity down to the sector, category, company, brand, and sub-brand/series. If you are interested, please contact service@sandalwoodadvisors.com. 
