COVID-19 claims its first major business casualty in Japan.

As Japan struggles to contain the spread of the coronavirus, officially named COVID-19 by the World Health Organisation, the local economy is being hit hard, with businesses at popular tourist sites now facing an uncertain future.

In the city of Kyoto, local merchants have taken matters into their own hands, setting up an “Empty” tourism campaign to lure visitors at a time when tourist numbers from China and other countries has dropped dramatically.

For one longstanding business in Aichi Prefecture, however, the drop in tourist numbers has dealt a fatal blow, as they’ve now been forced to file for bankruptcy.

According to Japanese credit reporting agency Tokyo Shoko Research, Fujimisou, a ryokan located in the onsen hot spring resort town of Nishiura in Aichi Prefecture, filed a bankruptcy application with Nagoya District Court on 21 February, after being in operation for 64 years.

The 46-room ryokan, located at the tip of the Atsumi Peninsula, was once a thriving business, with guests enjoying fresh seafood meals sourced from Mikawa Bay and each room offering expansive ocean views. Fujimisou’s financial records show a turnover of approximately 550 million yen (US$4.98 million) back in December 2005. However, following a financial slump in 2013, they found themselves short on funds and were forced to come up with a solution, turning to the Chinese market to stay alive.

By shifting their focus to accomodating Chinese tour groups, the ryokan was able to turn their fortunes around, with demand from these tour groups growing in recent years.

▼ The view from Fujimisou

However, with their main cashflow coming from Chinese tourists, the drop in numbers over the last month, during what was meant to be the busy Lunar New Year holiday season, proved to be too much for the business, prompting them to go into receivership.

The massive number of cancellations by Chinese tour groups that tipped the longstanding ryokan into the red is a cautionary tale for other businesses who rely heavily on the Chinese market to survive.

As COVID-19 continues to spread, with new cases of infection in Japan rising by the day, and the Japanese government now advising that large-scale concerts, festivals and events be cancelled or postponed, there are growing concerns for the future of the local and global economy.

With the Ghibli Museum suddenly closing its doors and the Tokyo Olympics now hanging in the balance, the next few weeks are a pivotal time for containing the virus and the threat it poses to local businesses and society.

Source: Tokyo Shoko Research 
Top image: Pakutaso
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