Tourism Trends from China's Latest Golden Week
Well there it was; another demonstration of the impact that Chinese travellers are having on the global tourism industry. An estimated 589 million Chinese travelled during the Golden Week holiday, collectively spending $72 billion in seven days - more than Kenya's GDP for the year. With the number of trips growing 12% on last year's Golden Week, consumers' appetites for travel and experiences are showing no signs of waning.
If you needed further evidence of the scale of Chinese travelling en masse, the trusty annual Golden Week photos shouldn’t disappoint. Snaps of China's crowded highways, glass-bottomed bridges, Shanghai Disneyland and other domestic tourism sites last week should help you understand why more Chinese are opting to travel overseas. A record 6 million Chinese left the Mainland over the week.
When travelling abroad, Chinese are becoming more diverse and adventurous in their choices. It’s representative of an overall consumer trend from fresh fruit to fashion, creating plenty of opportunities for niche brands, destinations and attractions.
Take Morocco for example. If you had been shopping for souvenirs in Marrakesh's Souk Semmarine during Golden Week last year you would have struggled to spot ten Chinese tourists. This year you could have seen several hundred Chinese exploring the colourful bazaar. Visa applications for Morocco on Ctrip grew 3,500% this Golden Week. Similarly, you’d be much more likely to see tourists sending selfies on WeChat atop of Aztec Pyramids or forts in Montenegro.
Whilst destinations choices are becoming more varied, Chinese consumers’ love of a deal remains well-entrenched in the traveller psyche. With the pound at a 31-year low against the Renminbi, Golden Week visitors to Britain were up 60% compared to last year. Although the UK only received around one-tenth of the Chinese tourists France did in 2013, Britain was the most popular destination in Europe bar Russia this Golden Week. Perceived safety also bolstered preference to the UK over other Western European countries.
But even with overall numbers continuing to climb, destinations shouldn’t bank on Chinese shoppers continuing to spend at the rates they have previously. With the all-important youth travellers now seeking experience over accessory, and talk of lower duties in the Mainland, we are likely to see the way Chinese spend their travel budgets changing.Shopping will remain a key component for happy Chinese tourists, but of less importance as travellers are becoming more rounded. This is represented by the growth of destinations not known for shopping such as Russia, Cambodia and New Zealand, which saw year-on-year gains of around 60% this Golden Week.
Chinese travellers’ constantly evolving preferences show that they are open to new experiences, allowing plenty of opportunities for well marketed and delivered tourism propositions. China Skinny can assist with that. Here are this week's news and highlights for China:
Chinese Consumers
China’s Ultra-Rich Lead in Global Wealth Race: China's Ultra-High-Net-Worth-Individuals amassed $175 billion in new wealth in 2015, accounting for nearly three-quarters of total wealth creation among the world's ultra rich, according to Wealth-X. China has approximately 12,000 ultra rich, holding more than $1.7 trillion in wealth.
Chinese Malls Are Filled With Sad Animals: Intense competition between Chinese malls has seen polar bears, five-story slides, robots and art installations squeezed into centres to lure shoppers.
China's Tax Authorities Want You: China’s slowing economy is causing the Chinese government to step up its tax collection efforts, especially against foreign companies with off-the-grid "employees" in China.
Chinese Tourists
Chinese Tourists Take to the Road in Record Numbers for Golden Week: 589 million Chinese tourists were expected to spend $72 billion over the seven day holiday, taking 12% more trips than last year.
Golden Chinese Shopping Spree Will Tarnish Soon: Tax cuts and increasing options will make shopping in China less expensive. With younger Chinese preferring experiences to handbags, cash registers may not ring like they once did over Golden Week.
Chinese Wanderlust Drives Rapid Growth for Payment Platform Alipay: 80,000 merchants outside of China have signed up to accept Alipay to date.
Food & Beverage
Bananas are China's Most Imported Fruit: China imported $5 billion worth of fresh fruit last year, up from $4.3 billion in 2014. Even with the growth, three of the top four fruits saw small declines, indicating consumers are seeking more variety.
Online Buyers Help to Sustain Growth of Daily Goods: China's FMCG online sales grew 47% for the 12-months until June, versus 3% for the overall FMCG market. Chinese consumers' average spending on online groceries stood at US$20 versus in-store bills of US$15.
A Deeper Understanding About What is Actually Going on in Chinese Agriculture is Essential for Agri-Business Managers: Given many countries' dependence on China for food and beverage exports, most of us could spend more effort understanding Chinese consumers, Chinese government policy towards agriculture, and what is happening on the ground in rural China.
How Starbucks Can Revive China's Lost Tea Culture: Although Starbucks' entry into China's tea market has raised a few eyebrows, the chain can help shape some factors of the age-old tradition such as adding more flavour varieties with fruit or herb infusion; appealing to the young, urban big spenders and bringing new brewing methods to the healthy beverage.
Digital China
1000 New Xiaomi Stores Promised: Xiaomi recognises that promoting itself online is insufficient to build brand awareness and loyalty and physical stores will help it connect with its customers. 1,000 stores are planned within four years, up from just 25 today. Fast-growing Oppo reportedly has 200,000 retail stores in China.
Entertainment
Tencent Builds Music Streaming Empire: Tencent built its successful music empire by prioritising scale over price in the beginning. Whilst it has taken time to educate Chinese consumers to see value in paying for music, it now has 10 million users paying as much as ¥15 ($2.25) a month for the premium service which includes concert tickets and games bundled with their subscription.
Luxury
What Luxury Retailers Can Expect From China’s Golden Week in 4 Key Charts: Online analysis around Golden Week found four themes: 1) South Korea and Japan in; Hong Kong out 2) luxury shopping remains at the center of travel activities 3) first-tier cities key, but the market becomes more fragmented and 4) soft luxury over hard luxury.
Coach’s Tmall Shop Closes as Luxury Brands Turn to WeChat Sales: Earlier this month, Coach announced that it would close down its official Tmall store, reducing its China ecommerce sales channels to a standalone online store and WeChat shop. Coach declined to give reasons for closing its shop, but many international luxury labels have avoided selling on Tmall out of fear of appearing too mass-market. Just 35% of luxury brands selling online in China through any channel according to L2.
Cars
Chinese Consumers Hate That New-Car Smell: The sweet, leathery smell that American consumers crave in their new cars has topped the list of complaints by Chinese car buyers for a second straight year according to J.D. Power. Consumers try to get rid of that new car smell by using bags of activated carbon, lemon, grapefruit or orange peels, and a mix of water with vinegar. Car washes also offer “ozone sterilization” to eliminate toxins.That's the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.
