Why US Brands Should be Interested in China's Golden Week Tourists
No holiday period provides a better barometer for the state of tourism and general consumer sentiment in China than the October Golden Week. Unlike Chinese New Year when the majority of Chinese return home to their families, October National Day Holiday is all about leisure travel with around 700 million Chinese going on vacation.
This year's Golden Week will see nearly seven million Chinese travelling abroad - well up on last year's six million travellers. Japan is the top choice for the first time, with Thailand second and Hong Kong third.
Japan's spot at the top of the list provides an interesting takeout for the US and other countries in the midst of a geopolitical spat with China. Many readers probably recall how fast Japan fell out of favour in China due to the Diaoyu Islands dispute in 2012, which saw anti-Japanese protests across China and plummeting sales of everything from Toyotas to trips to Tokyo. With the tone of Chinese state media and social feeds becoming less positive about the US of late, there is a likelihood that sales of some US brands may take a dip as the result of less favourable consumer sentiment, in addition to the tariffs. Yet based on Japan's return to favour, even if sentiment does change, it won't be irreversible.
Another interesting takeout from the increase in Golden Week tourists is that Chinese consumers appear as positive as ever. With around 15% growth in tourists heading overseas, consumers remain willing to spend like never before. This is supported by sales of the hockey-puck-calorie-bomb - Moon Cakes - which increased 5-10% on last year, despite Chinese consumers' pivot to healthy eating. And one of the most important indicators affecting how wealthy Chinese consumers feel - house prices - rose at the fastest pace in two years following six straight months of acceleration.
There are countless theories about how much the trade war will affect China. One of the common beliefs is that it will be consumers and their domestic buying power who will cushion the economy from a dip in exports. As we have learnt in the past, imploding stock markets have much less effect on consumer sentiment than they do in the US. Many of the indicators and theories that form the foundation in Western economies hold less relevance in China's unique system.
It is still too early to understand what impact Trump's tariffs have made on the Chinese economy and the global economy as a result. Nevertheless, Trump is unlikely to be happy about the swathes of unfazed tourists boarding planes next week, a little heavier from their portion of lotus seed paste moon cakes.
For readers in the tourism sector, we hope this Golden Week brings you plenty of good things from China. For our China-based readers, we hope you have a wonderful break and manage to avoid the airports, stations and roads at their worst. China Skinny's office will be closed over the week and we'll be back delivering our unrivalled research and strategy services from October 8, and this newsletter from October 10.
Here are this week's news and highlights for China:
Chinese Tourists
Spreading Their Wings: How Millennials Turn the World of Travel Upside Down: A shift in Chinese traveller preferences is opening up new opportunities for travel and tourism operators worldwide who can now advertise directly to China's 400 million children of the 1980s and 1990s.
7 Million Chinese to Travel Abroad this Golden Week: Nearly seven million mainland Chinese will travel abroad over the national holiday this year, a healthy increase from last year's six million.
Alibaba’s Robots are Coming to Hotels and Hospitals: The robots are able to navigate autonomously and include multiple sensors that make them capable of avoiding collisions, understanding their environment, identifying individuals, controlling elevators, and comprehending features including room numbers. They can carry 30kg allowing them to deliver food and pick up and drop off laundry at a hotel guest’s room.
Chinese Consumers
What a Controversial Pastry Says About China’s Economy: Consumption of mooncakes is a measure of the health of the economy in China, and this year is particularly interesting in the midst of the trade war. Sales of mooncakes were forecast to rise by a solid 5-10% this year, with strong sales of expensive varieties. At least 30 listed food companies, more than ever before, are vying for a bite of the $2 billion mooncake market this year.
China's House Prices Rise at Fastest Pace in Two Years: New-home prices in August gained 1.49% from July - the sixth straight month of acceleration. Wuxi was the fastest growing city at 3.4%.
Trade War Resolution Has To Come from the Top, Says Coca-Cola's Ferguson: Coca-Cola has been unaffected by the trade war to date and remains bullish on the market, although Greater China President Curt Ferguson believes Xi Jinping and Trump should "exchange WeChats". Chinese consume an average of five commercial beverages a day, and Coca-Cola brands barely do one a week, believing enormous potential remains for them in the market.
China’s ‘Masculinity Crisis’: The Internet Slang That Stereotypes Chinese Men: A well-known Chinese educational program for children that featured a ‘feminine-looking’ boyband ignited discussions on masculinity in China, with state news channel Xinhua stating "...these sissies promote an unhealthy and unnatural culture which has a not-to-underestimate negative impact on the youth. The sissy culture, driven by consumption, challenges the public order and worships a decadent lifestyle."
Digital China
Meituan Dianping Rises on Hong Kong Debut After $4.2 billion IPO, Pushes Co-Founder’s Net Worth to $5.3 billion: The Meituan Dianping food delivery, shopping, tickets and hotel booking app value broke the $50 billion-mark after its IPO last week. The service has 340 million users. Much of the IPO cash injection is expected to be spent on a fight for users with Alibaba's ele.me.
Apps Within Apps: UX Lessons from WeChat Mini Programs: WeChat's hugely popular and important Mini Programs have some usability rules such as: 1. Maintain the core functionality and content that users expect; 2. Always consider the context of use. On mobile, support quick activities and design for interruption; 3. Take advantage of the platform’s core functionality; 4. Design mini programs with infrequent users in mind; and 5. Support seamless cross-channel transitions.
Food & Beverage
The Pot (Not That Kind) Is Hot at Haidilao: Haidilao, famous for its 341 Sichuan-style hotpot restaurants and extra service such as nail treatments, providing customers a cover to keep the bubbling broth from your phone, and even a noodle dance, is worth $12 billion following its IPO in Hong Kong.
China Trademarks – The (Mis)Classification of Wine: Wine brands just wanting to sell wine in China can be happy with registering in Class 33, which covers alcoholic beverages (except beer). But you may want to protect your brand from being sold on corks or beer.
Entertainment
China's Film Regulator to Ban Movie Ticket Subsidies: Over 90% of all movie tickets sales are transacted online in China today, often coupled with steep price discounts. In some regions of China during a major film's opening weekend, it's not uncommon to find tickets available for less than ¥10 ($1.46). This is being driven by film producers and distributors to bolster opening-weekend numbers to create the appearance of a must-see hit, or as a means of pleasing investors. This practice is now being banned by Beijing.
Environment
Does the Chinese Public Care About Climate Change?: 94.4% of Chinese in a survey believe climate change is happening, with 73.7% claiming they'd pay extra for climate-friendly products. Chinese consumers still believe the Government is the most important group in climate action, followed by the media and environmental groups. Individual citizens came in fourth, just ahead of enterprises.
Sport
The World’s Largest Indoor Ski Resort to Open in Shanghai: Since Beijing won the rights to host the 2022 Winter Olympics, dozens of new ski resorts have been announced. The latest development, Wintastar Shanghai will cover a whopping 227,000 square metres, with the ski slope itself spanning 90,000 of those. It will be three times the size of Ski Dubai, once the world's largest indoor ski scope. There will also be a Viking-themed water park set over two levels and taking up 28,000 square metres of the space. In related news, China's Amer sports has offered $5.5 billion to buy Finland's Amer Sports - the parent company of Salomon skis.
That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing strategy, research and digital advice and implementation.
