China's growing sway felt in north Japan ski town

[March 07, 2011]  NISEKO, Japan (AP) -- A new language can be heard on the slopes of this popular ski resort in northern Japan: Chinese.

Foreign tourists and investors have flocked to scenic Niseko in recent years, giving this rural region a badly needed economic jolt. It is a rare success story that, if replicated, could help lead Japan out of two decades of stagnation.

Australians were the first to arrive in the early 2000s, followed by skiers from Hong Kong, Singapore and elsewhere in Asia. Mainland Chinese, while still relatively few, are the latest -- and potentially the biggest -- wave.

"This place has so much potential. It's such a nice break from the chaotic situation in China," Guy Cui, a 48-year-old Beijing resident in the financial industry, said as he stepped out of a spacious, modern cabin and squinted in the sunlight.

Last year, he came with 25 friends and relatives over the Lunar New Year holiday. This year, the group swelled to 52. "This is the trend of the future," Cui predicted, prompting a friend to joke that Niseko will be overrun with Chinese in 10 years.

In some ways, what's happening here is a reversal of roles: 20 years ago, Japan was dispatching rich tourists and buying up trophy real estate around the world, prompting people to worry that Japan Inc. would take over the world. Now, Japan's growing dependence on China and other newly wealthy neighbors is creating some consternation at home.

"It's rather like the American fear of the Japanese in the late `80s. It's fear of these rich outsiders coming in and dominating," said Alex Kerr, an author and sustainable tourism consultant in Japan. "That's what happens when a country that thought of itself as the unquestioned dominating leader suddenly discovers that there are others with more money."

Japan has set the ambitious goal of tripling its number of foreign tourists from 8.6 million last year to 25 million by 2020. With its population shrinking and economy flat, Japan must open up to trade, investment and tourism, Prime Minister Naoto Kan declares, if it is to reverse a slow decline. But it's a tall order in this historically insular country.

Foreigners account for about half the hotel nights in Niseko during the winter, and they're snapping up condominiums too. Major developers from Hong Kong and Malaysia plan to turn the place into an Asian Whistler, the Canadian ski resort.

Residents welcome the new money but worry about overdevelopment, the environment and, in particular, China's rise.

Japanese media have played up Chinese purchases of forest land around Niseko, spurring rumors that the buyers plan to strip the hills of lumber and drain the streams of water -- fears that appear to be unfounded.

"We're not sure who's doing what with that land," said Yukio Yamamoto, a Niseko native whose house now stands in the shadow of sleek holiday condominiums. "We want people to come here to the community and invest in it and care for the land."

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Set amid rolling hills on the island of Hokkaido, Niseko has plenty going for it: hot springs, clean air, fresh seafood, stunning views of Mt. Yotei -- an extinct volcano that resembles Mt. Fuji -- and 45 feet (14 meters) of powder snow a year, one of the highest levels among resorts worldwide.

It was popular among Japanese during the country's economic heyday, but went into decline after domestic skiing peaked in the early 1990s. Now, the main village of Hirafu has morphed into a bustling hodgepodge of condominiums, cabins and pubs with a distinctly international feel.

In early February, the place was swamped with families from the Chinese-speaking world, particularly Hong Kong, for the Lunar New Year, marked with fireworks at the base of Mt. Annapuri.

Property agents say Hong Kong and Singapore buyers account for 70-80 percent of condominium and land purchases, with interest emerging from Malaysia and mainland China. Japanese developers are largely absent, still gun-shy from an early 1990s property market collapse.

"The Japanese are complacent," said C.J. Wysocki, a Hong Kong-based American lawyer for GE's aircraft business. He built an apartment building with 10 units in Hirafu and sold several to wealthy Asians. "The foreigners are the ones who are saying this place is amazing, it needs to be preserved."

Foreign tourists spent nearly 200,000 hotel nights in area accommodations last winter, up from just 7,800 eight years ago, according to the Niseko Promotion Board, which has hired Korean and Chinese speakers to field questions and maintain its foreign language websites.

Mainland Chinese visitors accounted for 6,100 nights and are expected to top 40,000 within five years, said Tomokazu Aoki, the board's deputy administrative director.

Hokkaido has seen a spike in Chinese visitors after the 2008 hit movie, "If You are the One," which introduced the island's rugged beauty to Chinese viewers.

They aren't big skiers yet -- most hopscotch the island on bus tours to hot springs, lakes and discount shopping centers. But the sport is catching on -- 20 million now ski, up from 5 million a couple of years ago, the China Ski Association estimates -- and demand for resort vacations is expected to increase.

"The wealth will grow, the skiing population will grow, people will want to be more international," said Thomas Liu, a Hong Kong native who lives in Beijing and came to ski with his family.

Malaysia's YTL Corp. bought one of Niseko's four main ski areas, including the Niseko Hilton, for $66 million last year. Pacific Century Premium Developments, the real estate arm of Hong Kong businessman Richard Li's PCCW, bought the nearby Hanazono Resort in 2007.

Both plan upscale condominiums and villages with boutiques and fine dining to remedy the lack of shopping that is essential to drawing Asian tourists.

"Niseko is such a natural destination for what we call new wealth," said Francis Yeoh, the managing director of YTL, who likened Niseko's potential to the beach resorts of Bali in Indonesia or Phuket in Thailand.

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Mainland Chinese are coming to Japan in record numbers -- 1.4 million last year, second only to South Koreans -- and they are collectively the biggest spenders. Snapping up cameras, cosmetics and handbags, they make up about a quarter of foreign tourist consumption.

Still, many experts are skeptical that the Niseko formula will work in the many hot springs and ski towns that are in slow decline. Many resist foreign influence, and Kerr calls them "hopelessly old-fashioned."

Hakuba, a ski resort in central Japan, has seen an increase in Australians, but many residents feel strongly about protecting the local culture and don't want change, said Yasuaki Enari, deputy director general of the Hakuba Tourism Bureau.

"Tourism is going to be a massively important industry for Japan in the future, and people haven't caught onto that yet," Kerr said. "The few places like Niseko that have really picked up on it are going to see an economic boom" while the rest will be in trouble in 20 years.

The arrival of Chinese tourists has sparked culture clashes in Hokkaido.

Shopkeepers and hotel operators complain about Chinese talking loudly in public, cutting in line and taking food from buffets back to their rooms, which is against the rules.

Chinese tourists counter that Japanese can be cold or give preferential treatment to other Japanese.

A pamphlet for foreign visitors from Sapporo, Hokkaido's capital, gives pointers on "doing things the Japanese way." That includes talking quietly, letting restaurants know if you need to cancel reservations and avoiding bargaining except at discount electronic megastores.

Some Japanese don't want to stay in the same hotels as other Asians, so establishments often must choose which market to pursue, said Kuniharu Sakai, deputy manager at a hotel popular with Chinese tourists on the shores of Lake Toya, not far from Niseko.

"We shouldn't push Japanese manners on them," he said. "We need to accept and understand them."

Tourists may ruffle feathers, but Chinese land buying triggers greater fears.

A government investigation found that Hong Kong companies bought 403 acres (163 hectares) of forest land around Niseko in recent years, excluding the Pacific Century-owned land. Mainland investors are sometimes involved in such purchases, though officials don't know whether that's the case in Niseko. In any case, many Japanese lump together Hong Kong and mainland money collectively as "Chinese" in their minds.

Officials also suspect Chinese are behind the purchase of a 720-acre (292-hectare) tract in central Hokkaido by a British Virgin Islands entity.

The buyers, many of whom haven't been publicly identified, often gave vague reasons for the purchases, "which makes us a bit concerned," said Takao Kataoka, chief of the forestry planning section in the Hokkaido government. That's prompted calls for limits on foreign purchases of land.

Marcy Zhang, general manager of Crispins Property Consultancy in Shanghai, which is promoting property in Hokkaido, said most of her clients are wealthy Chinese who want getaway places overseas.

"It's mainly investing in a way of life," she said.

Japanese wariness of Chinese intentions points to the strained relations between the two Asian powers since Japan invaded China in World War II. A territorial spat between the two countries last fall led to a drop in Chinese visitors and reinforced fears in Japan about its neighbor's growing military strength.

Citing security concerns, Japan only allows flights from mainland China and Russia to Hokkaido's main airport on weekends and two weekday afternoons, so they don't coincide with drills at an adjacent Japanese military base. Tourism officials say that creates a bottleneck.

"Many Japanese are wary of Chinese," said Masanobu Saito, the owner of Bang Bang, a popular Japanese-style pub in Niseko's bustling village of Hirafu.

His future is tied increasingly to China's: 70 percent of his customers are from either Hong Kong or the mainland. The dependence on foreigners makes Niseko vulnerable too.

"Niseko is booming thanks to the Chinese," said Saitoh, who has begun studying Mandarin. "So if the Chinese economy were to take a hit, this place definitely would, too."

[Associated Press; By MALCOLM FOSTER]

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