Tax-free sales at retailer Matsuya’s flagship Ginza stores fell 15% in November YoY, marking the first sign that Japan’s retail sector is being hit by geopolitical tensions with China. Although local sales at Ginza stores rose 9.5%, overall revenue slipped 1.2%. The slump in inbound spending underscores how diplomatic tensions since mid-November are weighing on retail sales. Beijing’s travel warning triggered nearly 500,000 cancellations of Japan-bound air tickets by Chinese airlines in three days. Tax-free sales accounted for 37% of Ginza store revenue. Rival J Front Retailing reported a 4.2% increase in November sales, with tax-free sales rising 14% YoY.