Surge in Japanese Product Popularity in South Korea Amid Improved Relations and Favorable Yen
By Hyunjoo Jin
SEOUL (Multibagger) - Japanese products, spanning from cars to beer, whisky, and clothing, are experiencing a resurgence in South Korea, bouncing back from the 2019 consumer boycotts. This revival is fueled by strengthening bilateral relations and a more favorable exchange rate for the yen.
Key Highlights:
- Automobile Sales: Japanese car manufacturers, including Toyota Motor (NYSE: TM) and Lexus, saw a 31% increase in sales in August compared to the previous year. This surge is partly due to Hyundai Motor's (OTC: HYMTF) production limitations and shifting consumer preferences away from electric vehicles.
- Diplomatic Efforts: South Korean President Yoon Suk Yeol, prioritizing improved ties with Japan since his 2022 inauguration, is set to meet Japanese Prime Minister Fumio Kishida in Seoul on Friday.
- Historical Context: The 2019 anti-Japanese sentiment in South Korea was triggered by Tokyo's export restrictions amidst a dispute over wartime forced labor. The two nations share a complex history, including Japan's colonial rule over the Korean Peninsula from 1910 to 1945.
- Changing Consumer Sentiments: A recent survey indicates 57% of South Koreans in their 20s and 30s view Japan favorably, compared to only 10% who hold a positive view of China.
Market Insights:
- Beverages: South Korean imports of Japanese beer soared nearly 70% in the first seven months of this year, while Japanese whisky shipments increased by nearly 50% during the same period, according to Korea Customs Service data.
- Fashion Retail: Japanese clothing brand Uniqlo, which had to close some stores in South Korea in 2019, saw a 31% revenue increase in the financial year ending August 2023.
- Automotive Sector: Despite Japanese cars representing a small fraction of South Korea's market, which is dominated by Hyundai and Kia, their sales have been on the rise. In August alone, Lexus, Toyota, and Honda (NYSE: HMC) sold a combined 2,527 vehicles, a 31% increase from the previous year. Meanwhile, sales of electric vehicles from Tesla (NASDAQ: TSLA), Mercedes, and BMW (ETR: BMW) declined, although Hyundai's EV sales rose due to new, more affordable models.
Consumer Perspectives:
- Shift to Hybrids: An official from Toyota Korea noted a growing interest in hybrid vehicles following recent EV fires, including an incident involving a Mercedes electric vehicle on August 1.
- Public Sentiment vs. Product Trust: A Sejong city resident, identified only as Park, expressed his disdain for Japan's national identity but chose to purchase a Toyota Camry hybrid due to his trust in Japanese automotive technology.
- Historical Detachment: Maria Hwang, a Seoul resident in her 60s, purchased a Lexus hybrid in late August, stating she prefers not to be burdened by historical tensions.
- Travel Trends: With the yen's depreciation, Korean tourism to Japan has surged. The number of Korean visitors to Japan jumped nearly 40% year-over-year, reaching a record 5.2 million in the first seven months of this year.
Analysis for Everyday Investors:
What This Means for You:
- Investment Opportunities: The rising popularity of Japanese products in South Korea indicates potential investment opportunities in Japanese companies, particularly in the automotive, beverage, and retail sectors.
- Economic Indicators: Improved South Korea-Japan relations and consumer sentiment can positively impact the economies of both nations, potentially leading to stronger stock performances for companies involved.
- Consumer Behavior: Understanding the shift in consumer preferences can help you make informed decisions about market trends and potential shifts in demand for specific products.
In simple terms, South Koreans are increasingly buying Japanese products due to better political relations and a cheaper yen. This trend could be beneficial for investors looking to capitalize on Japanese companies' stocks. Improved ties and consumer sentiment between the two countries are significant factors that might influence market trends and economic performance.