Golden Oldies Not the Chinese Tourists to Watch this Golden Week
Visit any popular tourist spot in China or abroad next week and you're likely to appreciate the scale of China's tourist machine operating in top gear. October Golden Week is the yearly climax of leisure travel in China; for many, it concludes as much as 6-months of deliberating and planning for the big annual holiday. The Chinese Tourism Academy expects 710 million trips will be made by Chinese between October 1-8. That's 10% more than 2016 with spending up 23% to ¥590 billion ($90 billion).
Whilst the large majority of trips may be domestic, they can provide a glimpse into travelling preferences which are likely to follow for outbound travel. One of those trends is self-driving holidays. 560 million road trips are forecast to be taken - 10% more than in 2016 - providing no respite to last year's 'Carmageddon' which saw 50-lane traffic jams as travellers returned home to Beijing.
Over 6 million Chinese will travel abroad during the festival, with more and more travelling beyond the traditional Hong Kong, Macau and Taiwan destinations. Parts of Thailand, Singapore, Japan and the US are likely to be inundated, but the once-popular South Korea won't see a lot of love. China's trade diplomacy remains in full swing over the US missile defence system THAAD fall out as package holidays to the country remain suspended. CTrip expects a 70% drop in Chinese visitors to South Korea over Golden Week, following a 20.9% drop between January to July this year against a 5.1% increase of outbound tourism overall.
With the exception of a few long haul destinations and 'red tourist' hotspots, most Chinese visitors are likely to be fresh faced millennials. Just one in ten international trips from China are made by travellers 45 or older, with 60% of seats filled by 18-34 year olds.
Young, independent and Chinese travellers are driving change beyond those traditional Chinese traveller stereotypes of bus tours and shopping holidays. As proof of their increasing sophistication, dining, sightseeing and leisure activities took out the top spots in terms of daily expenditure, displacing shopping from its throne this year according to Hotels.com research. Chinese travellers born in the 90s spent an average of 35% of their income on international travel in 2016 versus 28% overall.
Across all age groups Chinese are taking more trips and for longer, with days per trip increasing from 3-4 and from 5-7 days over the past year. 80% of travellers surveyed are visiting multiple cities while away, presenting opportunities for lesser-travelled regions.
Fortunately, the growing wave of sophisticated Chinese travellers won't just benefit the travel industry. Education, investment, migration and a slew of well positioned consumer products will also profit from the halo effect of tourism.
Las Vegas will be one of the popular destinations for Chinese tourists over the next couple of weeks, and for Skinny readers in the dietary supplement, beverage, functional food, personal care and sports nutrition industries who will also be there for Supply Side West, ensure you attend the China Opportunities Workshop on Friday September 29 at 8:30-noon. China Skinny's Ann Bierbower will be opening the workshop, covering the what, why and how of trends in China. Please pop by to say hi! More information here.
For our China-based readers, we hope you have a great Golden Week holiday and manage to escape the crowds. We'll be back after the break in the second week of October.
Here are this week’s news and highlights for China:
Chinese Tourists
China's Millennials Are Driving World Travel Growth: 60% of outbound trips from China are made by 18-34 year olds, versus just 10% over 45 according to Phocuswright and Bloomberg Intelligence. Travel accounted for 9% of China's economy last year and is expected to grow 8% annually over the next decade - the highest rate of any major economy.
Canada Surges in Popularity for Chinese Travellers: Chinese travellers want more of everything – more time travelling, more locations and more exotic experiences according to Hotels.com research. Canada saw the biggest rise in intention to visit, becoming the third most popular country, up from 17th-equal last year. Germany is fifth, from 17th-equal. USA tied with France for the top-spot, up from 12th.
South Korea to Miss Out on Chinese Tourists’ Big Golden Week Spending as Political Tensions Linger: South Korea is likely to miss out on a share of Chinese tourists as package tours to the country remain suspended amid the fallout from South Korea’s decision to deploy the US missile defence system THAAD. Chinese tourists are looking to Thailand, Singapore and Japan instead. CTrip expects tourists to Korea to be down around 70% this Golden Week.
Chinese Consumers
Bringing Online Strategies to Offline Retail: More than half of Chinese consumers say they shop via mobile daily or weekly, yet only 46% say they shop at brick-and-mortar stores with the same frequency.
Will the Chinese Market Become More Open to Small Foreign Businesses?: China recently announced that it will further lower market access thresholds in areas like banking and the securities industry to attract more foreign investment. The aim is to promote the steady growth of foreign investment in China’s pursuit of a better business environment.
Digital China
Should I Expand to China? 3 Questions to Ask Before Committing to Enter the Chinese Market: They seem obvious for any tech entrepreneur thinking about entering the China market, but many still overlook the following questions: 1. Do the Chinese want your product? 2. Friend or foe? - could a potential competitor become a collaborator? and 3. Are you flexible enough?
3 Things You Need to Know About Augmented Reality in China: Continuing the 3-theme: 1. AR in China is mobile-first; 2. AR marketing is already viable in China; and 3. Be aware that the Chinese government has banned Pokémon Go and similar AR games in the past, citing national security reasons and concerns over consumer safety.
Tencent And WeChat Deliver New Ways For US Marketers To Directly Engage Chinese Consumers: Tencent has announced the launch of a new suite of advertising solutions and a US-based support team that enables US marketers to directly engage Chinese consumers on Tencent platforms both in China and while they travel abroad.
68 Things You Cannot Say on China's Internet: In a directive circulated this summer, the state-controlled association that polices China's fast-growing digital media sector set out 68 categories that should be censored.
A Guide to Programmatic in China: The Chinese ad tech landscape is very different from that in the West with most programmatic companies playing on both demand-side and supply-side, contributing to less transparency in the market and increasing the chances of a conflict of interest.
Food & Beverage
Chinese Two-Hour Fresh Delivery Service Raises $230m in Funding: The Missfresh ecommerce platform that guarantees two-hour delivery of fresh fruit, vegetables, meat, eggs and seafood from the US, Chile and Australia has raised $230 million from US and Chinese investors in its latest funding round. It plans to use the latest proceeds to deploy more freezers in more cities and residential areas around China, and invest $45 million to place 100,000 snack bars and freezers in office buildings in major cities. Online sales of fresh produce are expected to almost quadruple between 2016-2019 to ¥351 billion ($53 billion), yet the average net loss is currently 35-40% according to JD and just 1% are profitable.
AB InBev to Smarten Beer: The world's largest brewer plans to introduce more healthier products in China, such as alcohol-free drinks, low-calorie brands and low-carbon beverages - hoping to make consumers "conscious that they have smart drinking options." The company aims to have 20% of sales coming from drinks with low alcohol content by 2025.
Chinese Spirits Market Expected to Reach Over $450 Billion by 2021: China's spirits market is forecast to more than double from $205 billion in 2016 to $450 billion in 2021 buoyed by China’s younger consumer base drinking on social occasions and the country’s increasing number of female drinkers. China's share of the global spirits market is expected to grow from 32.8% to 46.9% over the next five years, by which time it will account for two-thirds of consumption in Asia.
Fashion
Two Threats to the Big China Dreams of Zara and H&M: Zara and H&M are doing better than most in China - they have great business models, are popular with Chinese consumers, they are following Uniqlo in terms of expansion into second and third tier cities and seem to be growing steadily, despite slowing growth in apparel overall, but they have been laggards online and face an increasing threat from local competition moving increasingly upmarket.
Sports
Just What is Going on at Alisports?: Just weeks ahead of the Alisports LPGA tournament, scheduled for October 5-8, the event has been scrapped because they were never granted the proper permit. Similarly, an announcement earlier this summer that China would host “the richest ever rugby sevens tournament” in Shanghai in October, with Alisports as the tournament organizer, looks unlikely to happen as there have been no further updates since.
Open Water Swimming Makes a Splash in China: The number of swimming events during the China National Swimming Week every July has grown from 186 in 2015 to 656 this year, of which 243 were open water swimming events. Over 2 million swimmers take part in open water contests in China every year. Swimming is the third most preferred sport for females (53%) and forth most preferred by males (38%). Running is the most preferred sport by both genders, with yoga forth most popular for females (31%).
That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing strategy, research and digital advice and implementation.
