Japan’s Uniqlo, Asahi and Lexus brands profit from warmer ties with South Korea

Japanese brands, Uniqlo, Asahi, and Lexus reported a recent surge in sales in South Korea, following a shift in political ties between Tokyo and Seoul
Relations sank to new lows in 2019 after Tokyo placed export controls on South Korea’s semiconductor sector, leading to a boycott of Japanese goods

Japan

Julian Ryall

Published: 6:16pm, 27 Mar 2023

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Japanese brands are once again in vogue in South Korea as improved relations between Tokyo and Seoul mean Korean consumers can buy Japanese cars, clothes and alcohol without fear of being criticised as “unpatriotic”, analysts have said.

Companies such as Fast Retailing – the parent company of Uniqlo clothing, Asahi beer, Lexus cars, ABC Mart shoes and others are all reporting a surge in sales in recent months, paralleling an improvement in political ties between the two neighbours.

Protests outside stores selling Japanese goods had also gradually ebbed, “because people would rather get on with Japan than get involved in more confrontation,” one analyst told This Week in Asia.

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The “No Japan” boycott began in 2019 as bilateral relations sank to new lows under Japanese Prime Minister Shinzo Abe and South Korean President Moon Jae-in, who were diametrically opposed on a multitude of issues.

Protests against Japanese imports began immediately after Tokyo placed new controls on a number of exports of chemicals critical to South Korea’s semiconductor sector.

New paperwork requirements and removing South Korea from its list of most-favoured trade partners came soon after courts in Seoul pushed ahead with civil suits against numerous Japanese companies that used forced labourers during Japan’s colonial occupation of the Korean peninsula early last century.

Tokyo has consistently denied the restrictions were a form of sanctions.

Confrontation was replaced by compromise when Yoon Suk-yeol assumed the presidency in Seoul in May 2022, receiving a warm welcome from Prime Minister Fumio Kishida in Tokyo.

In recent weeks, the two governments reached a series of agreements to lift export restrictions, resume sharing military intelligence, solve lingering issues surrounding the former forced labourers and “comfort women”, and to work more closely on shared security concerns.

Yoon’s call to reset their rocky historical relationship and to look to the future rather than the past appears to have resonated with the South Korean people.

Imports of Japanese beer soared 315 per cent in January from the previous year, according to Korea Customs Service data cited by Yonhap news agency.

Japanese beer brands like Asahi have noticed an increases in sales in South Korea, following improved bilateral relations between Tokyo and Seoul. Photo: Shutterstock

South Korea imported slightly more than US$2 million worth of Japanese beer over the course of the month, including Sapporo and Kirin, the highest monthly figures since July 2019.

Japanese beer imports hit a low of just US$6,000 at the height of the “No Japan” protests in September 2019.

Similarly, sales of Toyota and Lexus-brand cars rose sharply in February, with the Korea Automobile Importers and Distributors Association reporting sales of Lexus vehicles were up 183 per cent, while Toyota climbed 149 per cent.

Other Japanese brands are also enjoying a rebound in what has long been an important overseas market, with The Korea Herald reporting the Korean unit of shoe retailer ABC Mart more than tripled operating profits last year from 2021.

People walk past Japanese casual wear designer, manufacturer and retailer Uniqlo. Photo: Shutterstock

Athletic brand Asics turned an operating loss of roughly US$262,000 in 2021 to almost US$367,000 in profit in 2022. Hyundai Department Store confirmed double-digit sales increases for Japanese home appliances and games in the same period.

At the outset of the anti-Japanese campaign, Uniqlo was the easiest and most high-profile target, with protesters standing outside stores with placards demanding shoppers join their boycott.

The company’s sales in South Korea were cut in half in 2020 from the previous year and the firm reported operating losses of US$67.6 million leading to several store closures. Last year, however, sales were up 21 per cent and operating profit soared to US$86 million.

“As we are seeing in other parts of the world, with Covid restrictions fading, we have seen the needs of our Uniqlo LifeWear increasing in Korea and the gradual return of customers to our stores,” a spokesman for Fast Retailing said.

People would rather get on with Japan than get involved in more confrontation

Park Jung-won, Dankook University

“Going forward, we will continue to place importance on customer service and satisfaction in Korea,” the spokesperson added.

Park Jung-won, a professor of international Law at Dankook University, said most South Koreans had grown tired of the bickering and just wanted to go about their lives and buy what they wanted without being criticised for being “unpatriotic”.

“People would rather get on with Japan than get involved in more confrontation,” he said.

“They like Japanese stuff, from clothes to movies to culture and everything else, and they just want to be able to enjoy it.”

The travel sector is also taking off, with numbers of Koreans making the short hop to destinations across Japan rising in recent months and airlines resuming routes that had been suspended during the pandemic.

Some 1.39 million Koreans travelled to Japan in the year to March 16, up from 1.29 million visitors in all of 2021.