Is there a chance for Japan's tourism market? Why are Korean companies entering the market one after another? April 2nd 20:10
Japan's tourism industry has regained its vitality as the number of foreign tourists visiting Japan approaches pre-coronavirus levels.
Digitalization of tourism (Tourism DX) is now considered essential to increasing the value of tourism resources and growing the tourism industry.
Did you know that Korean startup companies are actually expanding into this market one after another? We covered the current situation and background.
(Seoul Bureau Keigo Nagano Im Kyung Sung / International Department Yoshizuka Biran)
Based in Tokyo? Korean tourism startup company
Last December. A brand new office has opened in Shibuya, Tokyo.
This is the "Tourism Enterprise Support Center Tokyo" established by the Korean government-affiliated company, the Korea Tourism Organization.
On this day, 15 excellent startup companies selected through a screening process moved in.
We aim to enter Japan's tourism industry from here through various business formats such as accommodation reservation services, airline ticket sales systems, and payment services for travelers.
A person in charge of the accommodation reservation website says
, ``Our goal is to find hidden gem accommodations across Japan and introduce them to the Korean and Southeast Asian markets.''
K-POP related company
: "We are planning a service where Japanese K-POP fans and Korean J-POP fans can travel between each other's countries and collaborate with tourism."
The Korea Tourism Organization provides this office to companies free of charge. The country is trying to support Japan's expansion into the tourism industry.
Digitizing manual labor at rental car companies
Jeju Island in southern Korea. Here is one of the companies that has moved into our Tokyo office.
A startup company that develops systems for rental car companies.
Visited by 14 million tourists a year, the island has more than 100 car rental companies.
This company learned that many procedures such as reservations and rentals remained to be done manually at rental car companies on the island, and seven years ago they developed a system that could digitize them.
We have steadily expanded our sales channels and have now grown to a company with 100 employees.
President Yun
: ``Until a few years ago, car rental companies in South Korea used an analog method of manually erasing the car model written on a whiteboard when a reservation was made.The rental car industry has not been digitized and remains analog. However, after doing some research, I realized that the market is very large, and that it will become even bigger as digitalization progresses."
This is a rental car company that uses Yun's system.
The office has an unmanned rental terminal for rental cars.
Customers can complete most of the procedures unattended by entering the necessary information such as name, driver's license, and insurance.
User
: ``Several years ago, we had to wait in line, but now the machine can recognize driver's licenses, which shortens the rental time and is convenient.''
The operation of rental car companies has also changed. In the past, this company manually sorted and dispatched reservations received through various channels such as telephone, email, and travel agencies.
However, now reservations made through the Internet are reflected in the system in real time.
This eliminates ``overbooking,'' in which the company receives more reservations than the number of vehicles that can be dispatched, and reduces the number of people in charge of making reservations and dispatching vehicles.
Rental car company employee
: ``Digitalization has allowed us to reduce the number of people who have to input by hand or answer phone calls.We now use those people to perform customer services such as washing cars.''
The next market is the Japanese rental car market
Yun's next destination for selling this system was Japan.
In Okinawa Prefecture, the lack of labor in the tourism industry has become a major issue.
Two years ago, we established a local subsidiary in Okinawa. By modifying the system to comply with Japanese laws and making the unmanned rental terminals operable in Japanese, we have so far concluded contracts with more than 20 companies, mainly in Okinawa.
The attraction is Japan's huge tourist market
In the future, Mr. Yoon would like to start his business in earnest in Hokkaido and Tokyo.
He says the biggest advantage of expanding into Japan is the large scale of the tourism market, which Korea does not have.
President Yoon
: ``Japan's tourism industry has a huge domestic demand market.Furthermore, it is a tourist powerhouse with as many as 30 million foreigners visiting in one year.However, when we look at rental cars and travel, digital Travelers feel very inconvenienced because the country's economy has not progressed.For us, we believe that the Japanese tourism market is a blue ocean (an untapped market).''
Japan's travel consumption, compiled by the Japan Tourism Agency, is approximately 18.7 trillion yen (2022).
Of these, 90% are Japanese domestic overnight trips and day trips.
Meanwhile, South Korea's tourism market is approximately $28.8 billion (4.3 trillion yen), according to statistics from the Bank of Korea.
Although it is not possible to make a simple comparison due to differences in the way statistics are collected, it appears that the size of Japan's tourism market is much larger than that of South Korea.
This difference in market size is what attracts Korean startup companies.
Aiming for Japan with unmanned tax-free service
Some startup companies are aiming to expand into Japan with the tax-free service, which is increasingly used when traveling overseas.
President Kim
: ``Through this device, tourists can receive (tax-free) products and refunds whenever they want.''
Last October, CEO Kim Young-eun (Kim Yong-un) started a new business that combines tax-free services and online shopping for foreign tourists visiting South Korea.
That's how it works.
First, tourists visiting South Korea enter a dedicated shopping site either before their trip or after entering South Korea, and purchase cosmetics and other products online, including taxes.
Purchased products will be delivered to special lockers located in downtown Seoul.
You can retrieve your items by scanning your passport into the scanner attached to the locker.
At the same time, any taxes you paid will be refunded on the spot.
The lockers are available from early morning until late at night, and the advantage is that you can pick them up in your spare time during your trip.
In South Korea, when you make a purchase using the tax-free system, you often have to go to a special counter at the airport just before returning home to pick up your items and receive a tax refund.
This is because it is often crowded during peak seasons, and you may have to allow a lot of time at the airport before departure.
The Japanese market is important for competing on the global stage
Kim started her company three years ago with five friends. We are now expanding into Japan and are considering whether we can offer this tax-free service to tourists visiting Japan.
We believe that the Japanese market is important as a first step towards expanding into the global market.
President Kim
: ``The Japanese market is the first market where we can check whether our business can expand globally.Furthermore,
in order for a start-up company to grow, it needs to meet talented people and good investors.'' .Japan is a market where you can find those things to enter the world.”
The challenge is collaboration with Japanese companies
Given that Japan and South Korea have different tax exemption systems, how should they enter the Japanese market?
Kim asked a Japanese investment fund for advice on entering the Japanese market.
Although the person in charge appreciated the future potential of this business, he also pointed out issues.
A person in charge of a Japanese investment fund said
, ``In the end, this business is not developed independently, but rather in collaboration with various companies and logistics companies in Japan, and in collaboration with various Japanese companies. This is a very demanding business.I think the most difficult challenge is how to form successful partnerships with major Japanese companies.''
After receiving this advice, Kim immediately took action.
Participated in a party held in Seoul where major Japanese companies gathered.
I wanted to find an opportunity to explain my business and meet companies that would be willing to partner with me.
Mr. Kim believes that the current good relations between Japan and South Korea represent a great opportunity.
Our goal is to start business in Japan within two years.
President Kim
: ``Today, two companies told me they were interested in our business model.I think it's important to take the first step.'' I believe that by providing services by leveraging the technology and experience of startup companies, we can create good opportunities for both Japan and South Korea."
How will Japan react to the expansion of Korean companies?
How should Japan's tourism industry respond to these moves by Korean startups?
We asked Tomotaka Hirabayashi, a member of the Japan Tourism Agency's study group for the promotion of tourism digitalization and an expert on the tourism industry, about the impact this will have on Japan.
Mr. Hirabayashi
: ``I think it will be a positive thing for Japan's tourism industry.I also work at a rental car company in Okinawa, and I often hear about the delay in digitalization in the industry, but I don't think there are any services in Japan that can solve the problem. There was a current situation where we were not able to create new products.If foreign technology can help us solve our problems and improve productivity, I think it will definitely be a good thing for the tourism industry."
He also pointed out that Japan's tourism market, where inbound tourists are rapidly expanding, is attracting attention not only from Korea but also from around the world, and that major Japanese companies and startups should pay more attention to the tourism industry and find business opportunities. Masu.
Mr. Hirabayashi
: ``I think Japanese companies still underestimate the economic potential of the tourism industry.When discussing tourism, we tend to focus on limited industries such as lodging, food and beverages, and souvenirs. However, I feel that there is little focus on investing in these areas and providing innovation to develop products and overcome challenges.Japan's tourism market has various regulations and unique business practices, and it is difficult to overcome them. The ones who know the most are Japanese companies.As
foreign companies aim to enter the market, now is the time to reevaluate their own tourism markets and work closely with such companies.There is great potential for various innovations to occur. think"
After finishing the interview
This interview started in August last year. I attended a business briefing session held in Seoul for a startup company aiming to enter the Japanese tourism market.
I was overwhelmed by the enthusiasm expressed by the assembled business owners for expanding into Japan's tourism market.
What these managers had in common was that the Japanese market was never their final destination.
The company used its expansion into Japan as a foothold, found partners there, and set its sights on expanding into markets around the world, including the United States and Europe. I felt that global competition without borders has begun in the tourism industry as well.
Keigo Nagano
, Chief Producer, Seoul Bureau
Joined the agency in 1998. Moved to the Seoul Bureau in July 2021.
Mainly covers Korean social issues and culture such as movies.
Seoul bureau
Lim Kyung-sung (Hayashi Kyung-seon)
From 2021, NHK Seoul bureau
will cover a wide range of topics such as South Korean politics and culture, with a focus on South Korea's Ministry of Defense.
International Affairs Department reporter
Minoren Yoshizuka
joined the bureau in 2019. After working at the Fukui bureau where she was first appointed, she
has been working at her current bureau since August 2023, where she currently covers the abduction issue and the military and security fields with a focus on the Korean Peninsula.