Buy Japan Thanks to the Yen’s Devaluation

Lee Yoon-jeong, a 34-year-old woman working for a financial institution, changed her destination for tourism and shopping during the holidays and Christmas from Hong Kong to Japan last year. Lee said, “I know by experience that luxury goods are sold at a much lower price and in greater variety in Japan than in Korea,” adding, “When I visited Japan 10 years ago as a college student, I could hardly buy anything because of the prohibitively high prices. But you can get your flight ticket price back by buying a few luxury goods there.”

The devaluation of the Japanese yen against the won is continuing to have a great influence on Koreans’ consumption patterns.

As Japanese prices fall, the number of Koreans who visit Japan for tourism and shopping is soaring, and increasing numbers of Koreans are trying to buy Japanese goods through online buying agents.

The Shifting Center of Shopping Tourism: From Hong Kong to Japan-

In 2004, when 100 yen was worth 1,100 won, Koreans had to pay 1,100 won for a product with a 100-yen price tag. But now they have to pay just 750 won. In terms of the foreign exchange rate, prices in Japan went down as much as 31.8 percent for Koreans.

Accordingly, Koreans are spending more money in Japan. There are now also many Koreans who go to Japan just for shopping. If Hong Kong and Singapore were hot destinations for shopping tourism for middle- to high-class Koreans, now Japan is emerging as a “paradise for shopping” thanks to their weakening currency.

Kim Hee-seon, a team leader at Hanatour, said, “With the devaluation of the yen continuing, the number of Koreans going to Japan for shopping or searching for items to import has shot up.”

Such a tendency is also visible in the amount of Visa card payments recorded. Koreans paid $251.16 million in Japan last year, up 23.3 percent from $203.75 million in 2005.

Booming Buying Agents-

Kim Gwang-dong, a 31-year-old office worker who got married in April, bought some home appliances for his new home through a buying agent.

The Sony Bravia 40-inch LCD TV that sold for 166,740 yen in Japan was about 1.33 million won (100 yen was worth 800 won back then). He learned through a price comparison website that the lowest price for the same product in Korea was 2.4 million won. Purchasing the TV through the buying agent cost 1.79 million won, duties, fees and delivery costs all included. It was 610,000 won cheaper than buying it in Korea.

In connection with online shopping malls in Japan, buying agents purchase products in the country on behalf of their customers and deliver them to Korea. It takes a few months because a Korean importer cuts the prices of its goods according to the changing exchange rate. But buying agents can reflect a change in the exchange rate on the items’ price tags.

Bid Buy, a buying agent, doubled its sales to 10 billion won in 2006 from the previous year.

Japanese Goods Make Inroads into Korean Stores-

Hyundai Department Store Apgujeong, which quadrupled the size of its import food store last year, stocks half of its 1,500 good inventory with Japanese foods. Yoo Ji-hoon, a food buyer, said, “We considerably increased our Japanese food inventory as their prices have gone down by five to 10 percent over the past years. And the sales of such foods have been going up by 20 to 30 percent a year.”

It is expected that more Japanese household goods will be sold in the Korean market.

Korean retailers who mainly purchased Chinese goods because of their price competitiveness are now turning to the Japanese market. Lee Byeong-gil, a team leader at E-Mart, said, “We have had few Japanese goods because of high prices. But we are considering buying some starting this year, as the weakening yen sent the price down.”

According to Korea International Trade Association, imports of Japanese home appliances for the first five months of this year expanded twice up to 50 times depending on the item. Small household appliances and beauty-related home appliances are the most popular.

Online marketplaces, including Auction and G-Market, have seen the sales of Japanese home appliances and clothes soar. Kim Hyo-jong, a team leader at G-Market, said, “All in all, the sale of Japanese goods has grown more than 40 percent from earlier this year,” explaining, “Japanese goods are getting more and more price competitive.”

imsoo@donga.com