Received 14 December 2010 Accepted 21 January 2011

Japanese Outbound Tourism to India:

A Macro-economic Analysis
Samit Chowdhury1 and Babu George2
Assam University1 and University of Southern Mississippi India1 and USA2

Japan and India have had a long period of mutual relationships in the economic and cultural realms. The present study examines potential linkages between selected macroeconomic indicators of a tourist origin country and its outbound tourism in the specific context of Japanese outbound tourism to India. It specifies regression models for tourist inflow to India from Japan for the period 1991-2008. Findings indicate that import by India from Japan and foreign direct investment by Japan in India positively impacts tourist inflow to India from Japan. The paper highlights the mismatch between Japanese tourism demand and the supply of India tourism. It is revealed that the current marketing strategy of India Tourism focussing entirely on Buddhist pilgrimage circuits is grossly misplaced and does not reflect the realities of the Japanese outbound tourism demand.
Keywords:

Macroeconomic indicators; outbound tourism; marketing strategy; Japan; and India.

INTRODUCTION

Indo-Japanese Relations Exchange between Japan and India is said to have begun in the 6th century when Buddhism was introduced to Japan. Indian culture, filtered through Buddhism, has had a great impact on Japanese culture, and this is the source of the Japanese people's sense of closeness to India. After World War II, in 1949, Indian Prime Minister Jawaharlal Nehru donated two Indian elephants to the Ueno Zoo in Tokyo. This brought a ray of light into the lives of the Japanese people who still had not recovered from defeat in the war. Japan and India signed a peace treaty and established diplomatic relations on 28th April, 1952. This treaty was one of the first peace treaties Japan signed after the World War II. Ever since the establishment of diplomatic relations, the two countries have enjoyed cordial relations. In the post World War II period, India's iron ore helped a great deal Japan's recovery from the devastation. Following Japanese Prime Minister Nobusuke Kishi's visit to India in 1957, Japan started providing yen loans to India in 1958, as the first yen loan aid extended by Japanese government. Since 1986, Japan has become India's largest aid donor and remains so.

*Correspondence concerning this article should be addressed to Babu George. Electronic mail may be sent via internet to
babu.george@usm.edu

Copyright 2007 Rex Publishing Co.

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The foundation of the historic relation between Japan and India was laid when Mr. Yoshiro Mori, the then Prime Minister of Japan and Mr. Atal Behari Vajpayee, the then Prime Minister of India agreed during the Japanese Prime Minister's landmark visit to India in August 2000 to establish the "Global Partnership in the 21st Century". Globalization and mutual dependence are offering new opportunities for mutual benefits. Hence, the Indo-Japanese foreign relations are also attaining more sophistication and new qualitative dimensions. The annual summit meetings have been held between Japan and India since 2005. These summits are attended by the Prime Ministers of the respective countries. In the Annual summit Meeting of 2008, the Prime Ministers of two countries signed a Joint Statement on the Advancement of the Strategic & Global Partnership between India and Japan. The Japanese Prime Minister Dr. Hatoyama had a three days visit to India on December 27th to 29th to attend the summit meeting of 2009. Both the Prime Ministers affirmed the advancement of diplomatic and strategic tie ups between the countries which culminated in the release of the joint statement entitled the New Stage of Japan-India Strategic and Global Partnership". In the recent years, more particularly the period since 1991, a gradual deepening of Indias economic relation with the East Asian countries may be discerned. This deepening of ties is evident both from the trends of growth of inter country trade, investment and of inter regional human mobility. As a regional block, East Asia comprising of ASEAN 10+ Japan, Republic of Korea and China has already emerged as the biggest trading partner of India, accounting currently for one-fifth of the countrys foreign trade-both imports and exports. To a certain extent the enhanced levels of relations between India and East Asian countries may be traced to such factors as Indias age old cultural ties and geographical proximity with her East-Asian neighbouring countries. Nevertheless, the

positive influence by Indias enhanced economic ties with the East Asian countries remains undeniable which warrants an in-depth investigation. Outbound tourism from Japan has surged since 1985, along with the appreciation of Yen against other currencies. The Ten Million Program announced by the Japanese Government in 1987 was with the objective of doubling international travel from Japan in the next 5 years (Nozawa, 1992). However, the economic recession in Japan in the 1990s compelled the Japanese to choose short haul destinations (Lim, Min, and McAleer, 2008). In the specific context of tourism between Japan and India, the year 2007 was declared as Japan-India Tourism Year. During the various meetings held among high officials during this year, various tourism focussed agreements were signed. Many negotiations are underway, including the ones for tourist visa relaxation for Japanese tourists and for their freer movement across certain domestic territories that are generally restricted for foreigners (Japanese Embassy of India, 2007). In the above backdrop, this study was carried out with the following objectives:

i. to examine the trend and pattern of tourist

inflow to India from Japan during the period since 1991; ii. to identify the factors that have a bearing on the trend of tourist inflows to India from Japan; and, iii. to scrutinize the marketing initiatives of India Tourism in successfully targeting the Japanese outbound market. Economic Indicators as Predictors of Tourism Economic indicators have been widely employed in the economic literature for the purpose of forecasting business activities. The usefulness of leading indicators is that they enable researchers

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to determine and predict turning points in the cyclical movements of an activity of interest (Jones and Chu Te, 1995). In the tourism demand literature, it is well acknowledged that Per capita income and Gross Domestic Product are some of the leading demand determinants in tourism demand analyses. According to the literature reviewed by Lim (2006), out of 124 published papers, income variables were employed in 105 empirical papers. In addition, a few other leading indicators have been considered in the literature. For instance, Cho (2001) and Turner et al. (1997) employed macroeconomic variables, such as money supply, gross domestic products, imports and exports, to examine tourist arrivals. Rossello-Nadal (2003) examined monthly tourist growth in Balearic Islands using the number of constructions, industrial production, foreign trade and exchange rates. Swarbrooke and Horner (2001) argued that the level of economic development and state of the economy can influence the demand for business travel and tourism. Accordingly, a high level of economic development and a strong economy increase demand and vice versa. Similarly, Njegovan (2005) asserted that business expectations can be one of the leading indicators that influence the demand for business air travel. The underlying reason is that firms are more likely to authorize travel for conference and business purposes when they feel more confident about the business environment. According to Prideaux (2003) the structural weaknesses in the national economy are not only the factor that affects the tourism flow: Gross domestic product (GDP), market competitiveness, and population size of a region have significant roles, too. Some other factors that might control tourist movements are globalization, exchange rate fluctuations, changes in visa regulation, manmade and natural disasters, etc. The growth of income per capita in a country can encourage more local residents to travel overseas,

causing domestic tourism to compete with foreign tourism. For instance, in China, the Chinese government introduced a new policy that promotes outbound tourism: with the continuous growth in disposable income, more wealthy Chinese residents can now easily switch from domestic holidays to overseas travel (Huimin and Dake, 2004). Athanasopoulos and Hyndman (2008) found that the number of visitor nights by domestic holiday-makers in Australia declined significantly, which could relate to Australians choosing overseas travel rather than domestic holidays. Kulendran and Wilson (2000) asserted that countries with more open markets provide opportunities for international trade as well as an expectation of increasing business tourism demand. Moreover, tourism researchers believe that trade volume or openness to trade between countries of origin and destination has a certain degree of influence on tourism demand, particularly for business travel. Hypotheses In the light of the above discussion, we propose the following hypotheses for empirical examination: H1: Trade (export and import) and investment (FDI) relations between India and Japan positively impact the tourist inflow from Japan to India. H2: Growth in the macro-economic indicators of Japan positively impacts the tourist inflow from Japan to India.
METHODOLOGY

Geographically, the study covers India and Japan. The study covers a period of 18 years, i.e from 1991 to 2008. The choice of the initial year was made keeping in view the launching of Indias economic liberalisation programme. The cut-off year for the study has been decided keeping in view the data-availability factor. Approximately, this is the period covered by the Eighth, Ninth,

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and Tenth Five Year Plans in India. It also coincides one and half decades of economic liberalization in India. There is generally a time lag between the actual year of occurrence of a phenomenon and the year of the publication of official data. Therefore the terminal year for the purpose of analysis are constrained by the latest data availability. The data for this study was gathered from India Tourism Statistics, Centre for Monitoring Indian Economy (CMIE), Business Beacon, various newsletters of Secretariat for Industrial Assistance (SIA), World Travel and Tourism Council (WTTC), and various issues of Statistical

Year-Book of Japan. Accomplishment of the objectives of the study called for gathering data on the following:

Detailed data pertaining to the inflow of tourists from Japan to India. Data pertaining to bi-lateral trade (export and import) and FDI inflow between India and Japan. Data pertaining to the macro-economic variables of Japan. Data pertaining to the religious composition, age-group and travel motivation of Japanese.

Table 1: Summary data used for the study

Total FTA in India* 1677508 1867651 1764830 1886433 2123683 2287860 2374094 2358629 2481928 2649378 2537282 2384364 2726214 3457477 3918610 4447167 5081504 5366966 Tourist Inflow from Japan* 46655 60137 49616 63398 76042 99018 99729 89565 73373 98159 80634 59709 77996 96851 103082 119292 145538 150732 % to India 2.78 3.22 2.81 3.36 3.58 4.33 4.20 3.80 2.96 3.70 3.18 2.50 2.86 2.80 2.63 2.68 2.86 2.81 Export from India to Japan, (in million Rs)** 1663.85 1351.22 1739.04 2027.29 2218.63 2007.39 1900.49 1651.46 1685.38 1782.22 1514.89 1867.64 1710.34 2127.14 2480.94 2860.47 3855.76 3006.91 Import by India from Japan, (in million Rs)** 1672.4 1360.7 1333.27 1516.11 2028.57 2459.94 2176 2132.34 2449.93 2526.98 1835.53 2152.78 1839.89 2669.31 3233.97 4060.58 4592.51 6326.49 FDI Inflow to India from Japan*** 527.10 6102.30 2574.30 4009.00 15142.60 14882.48 19063.50 12828.24 15947.28 8275.44 7352.74 6204.19 4343.86 5337.44 7449.55 5229.22 27751.60 9373.49 Macro Economic Indicators of Japan **** Urban GDP PCI Popula(in $) (in $) tion 3451276000 3766884000 4323790000 4760168000 5244246000 4620455000 4233780000 3842265000 4347650000 4649615000 4087726000 3904827000 4231249000 4584884000 4533965000 4340133000 4310100000 4302500000 20614.98 21241.88 21730.00 22355.77 23156.20 24141.77 24820.7 24593.49 24846.74 26089.20 26202.80 27202.80 28188.93 29584.63 31266.74 33400.00 34200.00 34065.00 32312540 32991760 33673410 34371060 35262730 35728020 36193370 36585240 36976600 37418460 37807050 38130200 38432500 38734990 39021670 40001270 40109498 40183654

Year

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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The collected data will be tabulated, processed, and analyzed to draw inferences relevant to the objectives of enquiry. The trend and pattern of tourist inflow from will be studied through time series trend analysis. For establishing causal linkages between tourists inflow to India from Japan with that of economic engagements and macro-economic indicators of Japan such measures as co-efficient of correlation and multiple regression will be applied.
DATA ANALYSIS

The trend in tourist inflow from Japan to India during the same period is depicted Graph 1. As the graph shows, there is a gradual increase in the demand for tourism to India, expect for a dip in the aftermath of 9/11. The trend of tourist inflow to India from Japan is exponential in nature and is growing by a factor of 4.9 percent over the year. Based on this trend and the coefficient of determination (R2), one might conclude that the general trend of increase is very likely to continue. Next, we calculated the Pearson coefficients of correlation between tourist inflow from Japan to India, export and import, foreign direct investment, and other macroeconomic indicators. The results are given in Table 3. It may be observed that most of these correlations are significant at P<0.05: 0.81 (export), 0.90 (import), 0.54 (FDI), and 0.79 (urban population).

The data collected for the study was analyzed using SPSS. The summary data for major macroeconomic indicators, tourist inflow, bilateral trade, and foreign direct investment inflow between India and Japan are given in Table 1. Table 2 presents the figures for Japanese outbound tourists overall vis--vis inbound Japanese tourists to India during the study period (1991 to 2008).

Table 2 Japanese tourists to India as a fraction of total Japanese outbound tourism

Inbound Japanese Tourists to India 76042 99018 99729 89565 73373 98159 80634 59709 77996 96851 103082 % of Japanese Tourists to India 0.50 0.59 0.59 0.57 0.45 0.55 0.50 0.36 0.59 0.58 0.59

Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Japanese outbound Tourists 15298000 16695000 16803000 15806000 16358000 17819000 16216000 16523000 13296000 16831000 17404000

Source: World Travel and Tourism Council. (WTTC), Interactive Data base.

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Graph 1: Trend of tourist inflow from Japan to India

Tourist Inflow from Japan 160000 140000 120000 100000 80000 60000 40000 20000 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 y = 52444e0.0494x R2 = 0.6288

Observation: Trend equation: y = 1E-38e0.0494 x X represents time Y represents inflow of tourists to India from Japan. R Square = 0.62 gives an indication of good fit as 62 per cent of variation in Y is explained by time using this equation. The Fitted trend: 0.0494 x Y= 1E-38e Where b= 0.0494, indicates that the rate of inflow of visitors from Japan to India during 1991 to 2008 is by a factor of 0.049 in a year.

Table 3 Correlations between tourist inflow and other variables

Export from India to Japan Tourist Inflow from Japan to India Import by India from Japan FDI Inflow from Japan to India Per Capita Income of Japan

GDP of Japan

Urban Population of Japan

Pearson Correlation Sig. (2-tailed) N

.815

.906

.547

.255

.856

.790

.000 18

.000 18

.019 18

.307 18

.300 18

.000 18

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Testing of Hypotheses The regression analysis carried out to determine the predictive fitness of the above model yielded a composite adjusted R2 of 0.88, which is a respectable result (Tabachnick and Fidell, 1996). The model summary is given in Table 4 and the coefficients are given in Table 5.
Table 4: The regression model summary
Model 1 R .963(a) R Square .928 Adjusted R Square .888 Std. Error of the Estimate 9864.915

source country, FDI by the destination country in the source country, GDP, and Per Capita, do not predict tourism flows. Japanese Tourism Demand and Supply of India Tourism Cha, Mccleary, and Uysal (1995) found three distinct groups among the Japanese leisure segment itself. These were sports seekers, novelty seekers, and family/relaxation seekers. Japanese tourists travel to the transition countries of Central Europe for both cultural and Meetings, Incentives, Conferences, and Events (MICE) related reasons (Balaz and Mitsutake, 1998). Some of the Japanese outbound tour operators even identified a demand for sex tourism, especially among the business tourists and began to include geisha (synonymous with prostitution) as a product (Leheny, 1995). The Japanese tourists have a great obsession for film tourism (Moore, 1985). Even though Japan has an old culture, Japanese consumer behaviour is still dynamically evolving, observes Dace (1995). In spite of an economic, political, cultural and geographical proximity between India and Japan, India is largely unable to capture a major slice of Japanese outbound tourists. During last one

It may be observed from the coefficients table that only two independent variables in the list, namely, the import of merchandise from Japan by India and the FDI inflow from Japan to India significantly predict tourist inflow from Japan to India (p<0.01). In other words, the proposed hypotheses are only partially supported. However, it is still valuable to know that variables such as exports from the destination country to the source country, urban population of the
Table 5 Model coefficients and significance values
Model 1 (Constant) Export from India to Japan Import by India from Japan FDI Inflow from Japan to India GDP of Japan Per Capita Income of Japan Urban Population of Japan

Unstandardized Coefficients B 109232.510 -21.985 12.695 1.738 1.21E-005 8.458 -.008 Std. Error 118797.025 14.546 4.362 .576 .000 4.879 .006

Standardized Coefficients Beta -.465 .550 .402 .170 1.261 -.676

T B .919 -1.511 2.910 3.017 1.591 1.734 -1.279

Sig. Std. Error .378 .159 .014 .012 .140 .111 .227

a Dependent Variable: Tourist Inflow from Japan to India

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decade (i.e. from 1995 to 2005) the percentages of Japanese tourists to India are just about .05 percentage of total Japanese outbound tourism, as we saw in Table 2. The reason behind the disappointing performance of India in attracting the Japanese tourists could be due to the fact that, when it comes to Japanese tourists, India Tourism is focussing only on the Buddhist destinations/circuits in India. This is well evident from the following contours of promotional strategies adopted for attracting Japanese tourists to India in the recent years:

Therefore, the promotional strategies thus lead to some implicit premises, viz: 1. Majority are Buddhist Tourists. 2. Buddhist pilgrimage happens to be the largest travel motivations 3. Relatively aged groups are the largest chunk of pilgrim tourists. However, the correctness of the above implicit premises is highly questionable and the graphs given below highlight the flaws in the premises (See Graphs 2, 3, and 4):

Outlay for Xth Five year Plan Rs 50 crs and

Rs 100 for XIIth Plan for development of Buddhist Circuits (proposed). Development of Buddhist circuit, RajgirNalanda-Vaishali-Bodhgaya, Bihar Integrated Development of Buddhist Circuit (Nagarjunasagar Amravati), Andhra Pradesh. Development of Buddhist Circuit at Tashiding, West Sikkim Some of the activates of the Indian Ministry of Tourism corroborate this: The Ministry is collaborating with the railways and civil aviation ministry to develop infrastructure in Buddhist interest sites, so as to tap the East Asian tourists. The Ministry plans to sell Buddhism and Bollywood in order to kindle the interest of East Asian tourists to India. The Ministry signed a MOU with the International Finance Corporation on 27-102010 to improve and promote Buddhist Tourism Circuits in India.
Graph 2 The composition of tourists by religion

Composition of Japanese Population based on Religion

OTHERS, 0.30% CHRISTIAN, 0.70% BUDDHIST, 41% SHINTOISM, 58%

SHINTOISM

BUDDHIST

CHRISTIAN

OTHERS

Source: Japan Tour Operators Association

Composition of Japanese population based on religion reveals that majority are the believer of Shintoism (58%) followed by Buddhist (41%).

The Mandarin and Japanese versions of Incredible India website focus predominantly the Buddhist circuit.

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Graph 3 The composition of tourists by age

Outbound Japanese Tourists by Age
27.30% 30.00% 23.25% 25.00% 18.50% 20.00% 15.00% 10.35% 6.50% 10.00% 4.90%6.80% 2.05% 5.00% 0.00%
09 Y ea 10 rs -1 9 Y ea 20 rs -2 9 Y ea 30 rs -3 9 Y ea 40 rs -4 9 Y ea 50 rs -5 9 Y ea 60 rs 70 -6 Y ea 9 Y ea rs rs an d ab ov e

Age (in years)

Source: Japan Tour Operators Association

The most productive age-group amongst the Japanese tourists are below 40-49 years.

The analysis of data and the literature referred above suggest that the promotional strategy currently pursued by India for Japanese tourists does not take into account the objective realities prevailing in Japan and also the dominant travel motivations of the Japanese tourists. Given that an appropriate and pragmatic promotional strategy serves as a pre-requisite for achieving any marketing break-through, the observed perceptional inadequacies at the level of strategy formulation definitely had its impact on tourism outcome as sizeable majority of the Japanese tourists were from younger age groups and leisure segment currently constitutes the biggest travel motivation. This means, the product mix that India offers for Japanese tourists should highlight the leisure component; also, and promotional strategies should be appealing to the younger generations of the Japanese tourists (which currently is tailored for relatively old pilgrimage tourists).
CONCLUSION

Graph 4 The composition of tourists by travel motive

Outbound Japanese Tourists by Purpose of Travel
80% 70% 60% Percen tag e 50% 40% 30% 20% 20% 10% 0% Leisure Business Purpose of travel VFR Others 7% 4% 69%

Percentage

Source: Japan Tour Operators Association

The travel motivations of Japanese tourists are guided by leisure (69%), business (20%), visiting friends and relatives (7%) and others (4%).

It is interesting to see the relationship between the increase in certain aspects of bilateral trade relation and the increase in tourist inflow to India from Japan. More research is required to answer why this happens. Many studies have examined how FDI promotes tourism in general (Endo, 2006; Tang, Selvanathan, and Selvanathan, 2007). But, research on how FDI from country A in country B increases tourism from A to B scarce. One probable reason could be that investment of a country in another country makes the citizens of the former country to take partial ownership in the affairs of the latter one. Likewise, when a destination country uses products made in the source country, tourists may feel at home. And, this is an especially important factor given the highly ethnocentric (Japanocentric) orientation of the Japanese society (Sullivan and Schatz, 2009). A similar argument might hold true for economic relationships in general, too. A history of healthy bilateral economic relations might
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increase the confidence and trust among the member country citizens. While such conditions alone would not generate tourism demand, these can act somewhat as hygiene factors: factors that are essential to maintain a healthy level of tourism flow, even though an increase in them do not necessarily increase tourism flow. The variable Gross Domestic Product of Japan (GDP) has a got only statistically insignificant and low degree of correlation with tourist inflow to India from Japan. This implies that the preference for India is not significantly impacted by the wealth of Japan as determined by its GDP. Even at its off-peak GDP (and Per Capita), Japanese tourists could afford to visit India. Generally, India is a relatively inexpensive destination, not so far away from Japan. This also explains why urban population did not emerge as a significant predictor. Also, at times, economic logic may be surpassed due to the presence of cultural-religious motivators as some of the key antecedents of most of Japanese visits to India. Another interesting observation is that FDI by India in Japan did not predict Japanese tourist movement to India even as FDI by Japan in India did predict the same. Future researchers may examine if this has any connection with the neo-colonialist master-slave theory. The FDI can have a cultural meaning of the wealthier country investing in (and controlling) the poorer one, which matches with the neo-colonial tourist assumption that the destination country should serve them (Akama, 2004). This is a far-fetched idea indeed since India had never been a Japanese colony. Yet, the cultural practice of neocolonialism need not necessarily be presided by a political history of colonialism. Oftentimes, culture-oriented differentiation strategies are proposed as a solution to increase visitation numbers and visitor satisfaction (Reisinger and Turner, 1999). Yet, marketing strategists are very likely to turn myopic in their zeal to implement such strategies. In naivet, the

tendency to reduce culture to religion and traditional values is rampant (O'Hanlon and Washbrook, 1992). In India, this started in the 19th century when the local intelligentsia began to apply a borrowed version of Orientalism which stereotyped other Asian counties and cultures. Targeting Japanese tourists based on such simple generalizable assumptions is problematic, notes Pizam and Sussmann (1995). In their study, these authors reveal that French, Italian, and American tourists a lot of commonalities where as Japanese tourists are very unique. Japanese value system is a complex whole made up of belongingness, family influence, empathy, dependency, hierarchical knowledge, thrift, commemoration, passivity, risk avoidance, etc (Ahmed and Krohn, 1992). For so long, Indian tourism authorities have seen the cultural make up of the Japanese in a very limited way: that is, every Japanese tourist who visits India is a Buddhist pilgrim. This premise and the marketing strategy based it works like a self-fulfilling prophesy: concentrate efforts to promote Buddhist circuits among the Japanese which makes more and more Japanese tourists to visit only the Buddhist circuits which in turn make the policy makers reaffirm their belief in the original preconceived notion. Thus, this study has got significant implications for the community of policy makers. However, tourism businesses need not wait for the government controlled India Tourism to shift their gears. REFERENCES Akama, J. S. (2004). Neocolonialism, dependency and external control of Africas tourism industry: A case study of wildlife safari tourism in Kenya. In M.C. Hall, & H. Tucker (Eds.) Tourism and Post-colonialism. New York and London: Routledge. Leheny, D. (1995). A political economy of Asian sex tourism. Annals of Tourism Research, 22(2),

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