Some restaurants and shops in Yokohama Chinatown hope that government relief measures for businesses introduced with the Oct. 1 consumption tax hike will help bring in new customers.
They are pinning their hopes on a rebate program for cashless purchases aimed at mitigating the impact of the tax increase to 10 percent from 8 percent.
The Yokohama Chinatown Development Association expects that its tie-up with PayPay Corp., a smartphone payment provider and a unit of Japan's telecommunication and investment giant SoftBank Group Corp., will attract consumers keen on taking advantage of the government incentive including inbound tourists to the ethnic enclave with around 500 restaurants and stores.
Under the government-funded program, 2 to 5 percent of purchases made through cashless methods such as smartphones, credit cards and debit cards are refunded with shopping points.
"About 300 shops and restaurants have already introduced PayPay and China's Alipay as part of efforts to follow the trend of cashless payments and to welcome more inbound tourists," said Nobumasa Takahashi, chairman of the association.
While cash continues to be the most popular payment method of Japanese consumers, the association had been making efforts before the tax hike to bring in adaptors of electronic payments.
Among Yokohama Chinatown's recent endeavors, up to 20 percent of purchases were returned to PayPay users during August with about 180 restaurants and shops joining the promotion.
According to the Ministry of Economy, Trade and Industry, the cashless payment rebate was offered at some 500,000 retail shops across the country as of Oct. 1.
In addition to higher price tags, another big concern for businesses was the preparation for the two-tier tax rate system also introduced by the government to cushion the impact of the tax increase.
The consumption tax for eat-in food has been raised to 10 percent while that for food taken away remains at 8 percent, forcing many restaurant operators across the country to present two different prices for the same items and update their cash registers.
Despite some concerns that adapting to these changes could cause a significant financial burden on privately-run businesses, restaurant and shop managers in Yokohama Chinatown are taking advantage of new technologies and a government subsidy to get through the potentially costly transition.
Tamie Oda, who runs a shop selling Chinese steamed buns and souvenirs, replaced her old registers with the latest mobile point-of-sale terminals a few months ago that use Apple Inc.'s iPad.
"The old register happened to be broken before the tax hike, so I introduced a so-called smart register at this timing," said Oda whose shop Ro Ishin is famous for its panda face steamed buns.
Mobile POS terminals, using tablets and cloud computing services, are spreading in Japan as they are much cheaper than conventional machines.
The industry ministry provides subsidiaries to shop owners to cover up to 75 percent, or 200,000 yen ($1,800), of each cash register bought to replace an old one.
The government expects many of the shops or restaurants in the country will introduce new cash registers, and about 240,000 units will be replaced by October.
The Chinatown association's Takahashi says, however, that concern remains about whether all the restaurants including mom-and-pop outlets can adjust to the two-rate system.
The association organized meetings for shopkeepers to study the tax hike in June and July with support of the local tax office, but there were only 30 or so participants at each of the meetings, far below the total number of shops and restaurants in the area.
"I would like all items taxed 10 percent to avoid confusion and trouble for retailers and customers," said Takahashi.