It is estimated that less than 1% of Japan's population is Christian; however, many Western customs related to observing Christmas have been adopted by the Japanese. In the past thirty-five years [or so], Christmas festivities have grown to enormous proportions. The observance is mainly commercial and closely tied to the American urban Christmas. Carols are sung in Japanese, Christmas trees are decorated with lights, turkeys are fattened, and mistletoe and holly are hung. It's a Japanese way to celebrate Christmas Eve by eating Christmas cakes and although bonenkai (forget-the-year-parties) are different from Christmas parties, these gatherings are also held among co-workers and friends. Christmas Eve has also become a night for couples to go out and spend a romantic time together at fancy restaurants or hotels, similar to Valentines Day. Instead of adopting the American Santa Claus, the Japanese looked into their own tradition to find someone with similar characteristics. This was Hotei or Hoteiosho, an old Japanese god. He was originally one of the seven gods of good fortune. An amiable, serene and contented deity, he is often represented as a Buddhist priest with large ear-lobes. His distinguishing feature is a huge stomach believed to be a symbol of his large soul. He is always depicted as joyously laughing, whether alone or surrounded by children. He holds a fan in one hand and carries on his back the linen bag (hotei) from which he derives his name. He carries the ‘Precious Things’ in the bag, the gifts and toys which he gives to good children. He doesn ‘t need a helper to check on the children’s behavior because they’re told that he has eyes in the back of his head.
[Source: Christmas-source.com, About.com]