With Japan set to approve casinos, it's likely that the nation -- once so inward-focused -- will look to tourism as an increasingly important answer to the problems presented by its aging population.
It is likely that it will take until 2023 for the first Japanese casino to open, as I wrote about at the start of the month. But even without gambling, a boom in tourism is already occurring.
Key among that trend is a surge in Chinese tourists that is already dramatic, and only picking up pace. This means several stocks are attractive long-term plays.
My colleague Tony Owusu will keep you posted on the latest developments with the casino-approval process, with Japan likely to follow Singapore's model of "integrated resorts." I want to take a look at what the rapid ramp up in Chinese visitors means for investors right now.
The number of total tourist arrivals from all nations into Japan looks set to increase 22% this year over last, helped in part by the weakening yen -- and most of all by an explosion in the number of travelers arriving from the mainland.
The Japanese government has set a mid-term target of attracting 1% of China's population as visitors each year. With the Middle Kingdom's population currently at 1.37 billion, according to the CIA World Factbook, we're already talking 13.7 million visitors annually.
Longer term, the government would like to see that figure boost to 3% of the Chinese population, or an enormous 41.1 million visitors. That's massive growth from Japan's total tourist industry as it now stands.
Japan saw 19.7 million inbound visitors last year, according to the Japan National Tourism Organization, and with 20.1 million already through the immigration gates through October this year, it is on track to hit 24.1 million visitors in 2016. China, with 5.0 million visitors last year, has already supplanted Korea, with 4.0 million arrivals, and Taiwan, with 3.7 million, as the top source of visitors.
In a report at the start of this year, the brokerage CLSA predicted that there will be 200 million outbound Chinese tourists by 2020 -- the year the Olympics take place in Tokyo. South Korea, Japan and Thailand rank almost neck and neck in terms of popularity as destinations.
Airlines will be some of the key stocks to watch in Japan. Japan Airlines (JAPSY) , once the country's leading airline and still its flagship, rested on its laurels too long, believing Japanese executives would remain loyal to the brand.
They did not, as airline tickets became commodities rather than status symbols. As a result, ANA Holdings (ALNPY) is now the country's leading carrier by volume. Both companies are interesting beyond the airline business, since they also own a lot of hotels.
Japan Airport Terminal (JTTRY) is another obvious choice as a beneficiary of an increase in all kinds of tourism. It runs Haneda, Japan's principal domestic airport, which also has some international flights. Japan Airport also runs duty-free shops in both Haneda and Narita, the top international airport. So it's a key beneficiary of Chinese visitors picking up souvenirs for loved ones and a bottle of Japanese whisky to take back home.
H.I.S. T:9603, which runs tour groups but also operates 10 hotels and 14 theme parks, has run up as the casino bill worked its way through government. But obviously it stands to gain immediately from increased numbers of visitors.
Resorttrust Group T:4681 runs 49 Japanese hotels as well as one in Hawaii. It also operates 13 golf courses. Chinese tourists were once only preoccupied with shopping, but they show an increasing propensity to seek out other forms of leisure, and golf fits that bill.
If casino visitors also opt for a broader gambling experience, Tokyotokeiba T:9672, the operator of Japan's main horse-racing venue, also stands to gain. It also runs auto-racing tracks and, like H.I.S., amusement parks.
Other stocks to watch are cosmetics company Shiseido (SSDOY) , which owns the Sephora brand. With $6.6 billion in sales for the 2015 year, the most recent reported, it's the heavyweight among Japanese beauty brands.
Chinese tourists do not trust products from within their country's own boundaries, and embark on international shopping sprees that involve rice cookers, makeup, food and many of life's basics. In fact, there's been some resentment reported in the local media in Japan that the shelves have been stripped of such essentials by Chinese buyers, leaving locals empty-handed.
Although it is substantially smaller than Shiseido, Kosé (KSRYY) is another stock to watch, with a similar range of beauty products. Though perhaps not as well-known as its rival, it's a venerable brand dating to 1946 and posts annual revenue of some $1.8 billion.
Chinese people, just like the British, love to gamble. That's what has made my current home town of Hong Kong such a success. So you can expect any Japanese casino to draw many a mainlander keen to expand his or her experience beyond what they can get in Macau.
Hong Kong was typically the first spot Chinese tourists would visit, with plenty making a side trip to Macau. But that's getting old. They're in search of new experiences, and increasingly looking not just for shopping opportunities but also exposure to other cultures.
So while we wait for the first Japanese casino to open its doors, you can bet that right now, Japan will benefit from the increasing desire for mainland Chinese to explore pastures new.